Nasdaq Plunges 1.16% to 25,818.69 as Chip Selloff Deepens; Dow Holds Above 52,900 Despite AI Jitters

Mumbai, July 8: The Nasdaq Composite closed sharply lower on Tuesday, shedding 302.47 points or 1.16% to settle at 25,818.69, as a relentless selloff in semiconductor stocks erased early gains and dragged the tech-heavy index to its worst session in weeks. The benchmark S&P 500 declined 33.58 points or 0.45% to 7,503.85, while the Dow Jones Industrial Average, despite touching a new all-time intraday high of 53,289.30, ended lower by 130.76 points or 0.25% at 52,925.15.

The market rout, which began in Asia-Pacific trading following Samsung Electronics’ blockbuster yet underwhelming quarterly results, intensified after reports emerged that Chinese artificial intelligence startup DeepSeek is developing its own AI chip. The development reignited concerns over the sustainability of the AI-driven rally that has powered US equities to record levels this year, prompting investors to rotate out of high-flying technology names into defensive sectors like healthcare and energy.

Chip Stocks Bleed $1.5 Trillion as Samsung’s Record Profit Fails to Impress

The semiconductor sector bore the brunt of Tuesday’s selling pressure, with the VanEck Semiconductor ETF plunging more than 5% as investors questioned lofty valuations tied to the AI boom. Intel Corporation emerged as the worst performer among major chipmakers, crashing 9.62% to lead the Nasdaq 100 losers, followed by Western Digital, which tumbled 7.81%, and Lam Research, which dropped 7.00%.

Also Read: How to invest in US stocks from India

Micron Technology, which has been one of the primary beneficiaries of the AI memory trade, slumped 4.64% to 938.38, while Advanced Micro Devices declined 6.49% and Broadcom fell 0.89%. The damage extended beyond individual names, with semiconductor stocks in Yahoo Finance’s basket losing approximately $1.5 trillion in market value since June 25, based on Tuesday’s intraday prices. Micron alone has shed nearly $350 billion over that stretch, while SanDisk, Intel, Applied Materials, and Lam Research have each lost more than $100 billion.

The selloff came despite Samsung Electronics reporting what appeared to be stellar second-quarter results. The South Korean tech giant posted operating profit of approximately 89.4 trillion won ($59 billion) on revenue of 171 trillion won ($113 billion), representing a 19-fold surge in quarterly earnings. However, Samsung shares tumbled nearly 7% in Seoul trading, triggering a 5% plunge in the KOSPI index and sparking circuit breakers as investors focused on concerns about the company’s spending plans and the sustainability of future demand.

“The ugly reaction to exceptional Samsung earnings is a reminder that, in richly valued markets, meeting expectations is no longer enough,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, capturing the sentiment that gripped global markets.

DeepSeek AI Chip Development Rattles Nvidia, Triggers Broader Tech Selloff

The downward pressure intensified following a Reuters report that Chinese AI developer DeepSeek is developing its own semiconductor for artificial intelligence inference—the process of generating responses and outputs to user prompts. The development threatens to reduce the startup’s dependency on US chipmakers, particularly Nvidia, which has dominated the AI chip market.

Nvidia shares initially dropped as much as 2% before recovering to close 0.65% higher at 196.93, bucking the broader chip selloff. However, the report added fresh uncertainty to a market already grappling with questions about whether the AI rally has moved too far, too fast. DeepSeek had previously rattled technology stocks when it unveiled an AI model that claimed to require far fewer chips and computing resources than US rivals, briefly sparking a sector-wide correction before stocks recovered.

The weakness spread across the technology sector, with Tesla declining 4.05% to lead losses among the Magnificent Seven mega-cap tech stocks. Apple slipped 0.73% despite JPMorgan raising its price target to $345 from $325 and maintaining an Overweight rating. Alphabet’s Class A shares edged up 0.10%, while Microsoft gained 0.46% and Meta Platforms rallied 2.52%.

Dow Hits Record 53,289 Before Reversing as Rotation into Defensives Intensifies

The Dow Jones Industrial Average briefly touched a new all-time intraday high of 53,289.30 in morning trading, powered by gains in healthcare, financials, and select consumer names. However, the blue-chip index surrendered its gains as the chip selloff deepened, closing at 52,925.15 with 18 of its 30 components ending in negative territory.

Chevron Corporation emerged as the top performer in the Dow, surging 3.50% to lead energy stocks higher amid rising oil prices. Johnson & Johnson advanced 3.03%, while UnitedHealth Group gained 2.38% and Procter & Gamble rose 2.24%. The rotation into defensive sectors reflected growing investor caution, with the State Street Health Care Select Sector SPDR ETF climbing to an all-time high.

Caterpillar, which has been one of this year’s biggest winners amid booming demand from data centers requiring power generation equipment, tumbled 3.06% to lead Dow losers. The heavy equipment maker’s decline underscored the unwinding of the AI infrastructure trade, with GE Vernova plunging 6.44% and Honeywell International dropping 2.71%.

Energy Sector Surges 3% as Oil Jumps on Strait of Hormuz Attacks

The energy sector emerged as the top-performing group in the S&P 500, rising more than 3% as oil prices spiked following Iranian attacks on commercial vessels in the Strait of Hormuz. Brent crude futures surged 5.21% to $75.74 per barrel, while West Texas Intermediate crude climbed 5.02% to $71.90, extending gains after the US Treasury Department revoked the license authorising Iranian oil sales.

Three separate ships, including a Qatari LNG carrier and a Saudi oil tanker, were struck by projectiles in the strategic waterway, which handles approximately 20% of global oil and gas trade. The Joint Maritime Information Center raised the threat level to “severe,” warning that “deliberate hostile action” by Iran is “likely under current conditions.” The attacks threaten to disrupt global energy flows and have already prompted multiple vessels to reroute.

Occidental Petroleum, Devon Energy, and APA Corporation each surged between 5% and 6%, leading energy stocks higher. Exxon Mobil gained 3.80%, while Chevron’s advance contributed significantly to the Dow’s relative outperformance compared to the Nasdaq.

SpaceX Joins Nasdaq 100 with $4.3 Billion Passive Inflows but Stock Slips 6.83%

Space Exploration Technologies Corporation, or SpaceX, made its highly anticipated debut on the Nasdaq 100 on Tuesday, just 15 trading days after its blockbuster initial public offering. The inclusion, one of the fastest in the index’s history, is estimated to trigger approximately $4.3 billion in passive inflows as index-tracking funds rebalance their portfolios.

However, SpaceX shares fell 6.83% to 149.47, slipping below their first-day opening price of $150 on a challenging day for technology stocks. The decline came despite a wave of bullish analyst initiations, with JPMorgan setting an Overweight rating and $225 price target, Morgan Stanley initiating at Overweight with a $300 target, and Goldman Sachs issuing a Buy rating with a $205 target.

SpaceX now holds a 1.34% weight in the Nasdaq 100, with its free-float market value—representing only about 5% of its total shares—keeping the initial weight below what its $2 trillion market capitalisation would otherwise suggest. The company’s addition to the index was anticipated to boost demand, though analysts noted that much of the move had been priced in.

Rivian Plunges 18% on $1.5 Billion Share Sale; Fiserv Jumps on Acquisition Talks

Rivian Automotive emerged as the worst-performing stock on the Nasdaq, crashing 18.12% to 16.49 after the electric vehicle maker announced a public offering of 75 million Class A shares to raise approximately $1.5 billion for general corporate purposes, including funding certain equity contributions for a Department of Energy Loan.

The capital raise came despite Rivian reporting preliminary second-quarter revenue of $1.55 billion to $1.65 billion, up from $1.3 billion a year earlier and above the Visible Alpha consensus of $1.45 billion. However, investors reacted negatively to the dilution, with the stock giving back a significant portion of its recent gains. Rivian shares had risen 8.1% on Monday and gained 19% last week.

Fiserv, meanwhile, rallied 5.18% to lead gainers on the Nasdaq 100 following a Wall Street Journal report that several major banks, including JPMorgan Chase, Bank of America, Wells Fargo, and PNC Financial Services, have considered acquiring the company’s payments network. The acquisition would allow banks to bypass limits on debit card transaction fees, though some banks have already abandoned the idea.

US Trade Deficit Widens 42.2% to $77.6 Billion as AI Imports Surge

The US trade deficit widened sharply in May, rising 42.2% to $77.6 billion, the highest level in 14 months, as imports surged to a record driven by strong demand for semiconductors and AI-related equipment. The goods trade gap expanded to $106.5 billion, also the highest since March 2025, while exports fell 3.2% amid a strong dollar.

Economists said the wider deficit could subtract approximately 1.7 percentage points from second-quarter growth, even as resilient imports signal strong domestic demand and continued investment in AI infrastructure. The data comes as the Federal Reserve prepares to release its June meeting minutes, with markets pricing in roughly a 60% chance of a rate hike in September.

Treasury Yields Hit Four-Week Highs as Inflation Concerns Persist

US Treasuries fell on Tuesday, pushing yields to four-week highs, as rising tensions around the Strait of Hormuz lifted oil prices and stoked inflation concerns. The 10-year Treasury yield climbed above 4.54%, up nearly seven basis points from Monday’s close, while the 30-year yield moved past 5.04%, reflecting a broader selloff in government debt.

The yield curve steepened, with the gap between 2-year and 10-year yields widening to a three-week high, signalling a bear steepening move as long-term yields rose faster. Investor focus is also on heavy Treasury supply, including a $58 billion three-year note auction and upcoming longer-dated issuances.

Gold Dips 1.2% to $4,115 as Oil Rises, Fed Outlook Weighs

Gold futures declined 1.2% to $4,115 per ounce, pressured by rising oil prices and expectations that the Federal Reserve will keep interest rates higher for longer. Spot gold fell 0.5% to around $4,168 per ounce, as inflation concerns persisted amid escalating tensions in the Strait of Hormuz.

Investors are now focused on the Fed’s upcoming meeting minutes for cues on policy direction, with markets still pricing in a roughly 60% chance of a rate hike in September. Higher rates tend to reduce the appeal of non-yielding assets like gold. Meanwhile, China extended its gold-buying streak to a 20th month, while Hong Kong moved to strengthen its role as a bullion hub.

Top Gainers and Losers: Agios Pharmaceuticals Surges 17.7% as Rivian Leads Declines

Among individual stock movers, Agios Pharmaceuticals emerged as the top gainer, surging 17.71% to $44.01 after 2.497 million shares changed hands, significantly above its three-month average volume of 1.119 million. The biopharmaceutical company, which focuses on cellular metabolism and related diseases, has a market capitalisation of $2.617 billion and has gained 3.06% over the past 52 weeks.

Bandwidth Inc rallied 11.36% to $67.56, while Viking Therapeutics gained 8.83% to $42.13. Cloudflare jumped 8.57% to $268.77, extending its year-to-date gains as investors sought exposure to cybersecurity and cloud infrastructure providers.

On the losing side, Rivian’s 18.12% decline was followed by Fervo Energy, which dropped 14.63% to $23.80. Ultra Clean Holdings tumbled 13.98% to $90.78, while Cohu Inc declined 13.17% to $50.97. Astera Labs plunged 11.52% to $382.89, and Ouster Inc fell 11.58% to $44.06.

The Nasdaq’s 1.16% decline to 25,818.69 reflected concentrated selling in semiconductor stocks, with the VanEck Semiconductor ETF dropping over 5% as Samsung’s record profit failed to meet elevated expectations and DeepSeek’s AI chip development raised competitive concerns. The Dow’s resilience near 52,900, supported by healthcare and energy rotation, highlighted sectoral divergence amid rising oil prices following Strait of Hormuz attacks. Treasury yields climbed to four-week highs above 4.54% as inflation concerns resurfaced, while gold declined 1.2% to $4,115 per ounce on Fed rate hike expectations.

Source

• https://www.nasdaq.com/

• spglobal.com/spdji/en/indices/equity/sp-500/

• https://www.dowjones.com/