US Stock Market Today: S&P 500 and NASDAQ Slide as Micron Leads Global Chip Stock Sell-Off

US stocks fell sharply on Tuesday as losses across semiconductor companies spread from Asian markets to Wall Street. The S&P 500 dropped more than 1%, while the NASDAQ Composite lost about 2% as investors reduced exposure to crowded artificial intelligence trades.

Micron Technology led the declines among US chip stocks before its earnings report on Wednesday. Investors also assessed rising interest-rate expectations, debt-funded AI spending and weaker global demand for technology shares.

Micron Leads Broad Semiconductor Stock Decline

Micron shares fell more than 10% as investors moved away from memory chip stocks. SanDisk dropped as much as 13%, while Western Digital lost about 11%. Qualcomm, Advanced Micro Devices, Intel and Marvell Technology also recorded steep declines.

The Philadelphia Semiconductor Index fell more than 7% at one point. Meanwhile, the VanEck Semiconductor ETF dropped about 6%, and the Technology Select Sector SPDR Fund lost roughly 3%. Micron’s Wednesday earnings report could provide new details about demand for memory products used in AI systems.

Ross Mayfield, an investment strategy analyst at Baird, questioned whether company performance caused the decline. “It doesn’t appear to be closely tied to the fundamentals of the AI story, but rather to the heavy concentration and strong inflows into global tech over the past few months now starting to unwind,” he said.

NASDAQ Composite Falls as AI Trade Loses Momentum

The NASDAQ Composite fell about 2% in early trading after declining 1.3% on Monday. The index reached its lowest level in more than a week and moved almost 5% below its early June peak. The NASDAQ 100 was also on course to lose more than $1 trillion in market value if the decline held.

Nvidia fell around 3%, pushing its market value below $5 trillion. Alphabet also moved lower after losing 5% on Monday amid concerns about departures from its AI teams. Tesla, Oracle and other major technology stocks added pressure to the market.

Questions about AI spending also affected sentiment. Large technology companies have committed billions of dollars to data centres, processors and other infrastructure. Investors are now seeking clearer evidence that AI products can produce enough revenue to support those costs.

Defensive and Software Stocks Attract Buyers

Although the major indexes opened sharply lower, several non-chip companies recovered as bargain hunters entered the market. Microsoft rose more than 2%, while Apple, Amazon and several software companies traded higher.

Salesforce, Adobe, ServiceNow, Workday and Atlassian gained after earlier losses. Defensive stocks also attracted demand. Walmart, Procter & Gamble, Johnson & Johnson and Merck moved higher as investors shifted toward companies viewed as less exposed to the AI spending cycle.

Consumer staples led the advancing S&P 500 sectors with a gain of about 1.2%. IBM climbed around 4% after JPMorgan upgraded the stock to overweight. Still, declining stocks outnumbered advancing shares on both the New York Stock Exchange and NASDAQ.

Asian Chip Rout Spreads to Europe and Wall Street

The global sell-off began in Asia, where South Korea’s Kospi fell almost 10%. SK Hynix closed more than 12% lower, while Samsung Electronics also declined. South Korea’s market had gained about 95% this year before Tuesday’s drop.

Japan’s Nikkei 225 lost 3.55%, ending an eight-session winning run. Taiwan-linked shares also weakened, while the iShares MSCI South Korea ETF fell about 9%. The iShares MSCI Taiwan ETF dropped approximately 5%.

European markets followed the same direction. The Stoxx 600 fell around 1%, while its technology sector lost about 3%. Semiconductor companies ASMI and STMicroelectronics each declined more than 6%.

Fed Rate Concerns Add Pressure to Technology Stocks

Investors also assessed expectations for tighter US monetary policy under Federal Reserve Chair Kevin Warsh. Markets increasingly expect two interest-rate increases by December, compared with forecasts for one quarter-point increase two weeks earlier.

Higher rates can reduce the present value of expected earnings from fast-growing technology companies. They can also raise borrowing costs for companies financing large AI projects through bonds and other debt.

Meanwhile, Wall Street is waiting for Thursday’s Personal Consumption Expenditures Index, the Federal Reserve’s preferred inflation measure. Cerebras is scheduled to report earnings after Tuesday’s closing bell, followed by Micron after markets close on Wednesday.

Wall Street remains cautious as investors reassess AI-driven valuations, semiconductor demand and the impact of higher interest rates. Upcoming earnings reports and inflation data will likely determine whether the technology sell-off deepens or stabilizes.

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