Major U.S. equity indexes fell sharply on Tuesday as investors sold broadly, with the S&P 500 down 1.26%, the Dow Jones Industrial Average down 0.30%, and the Nasdaq 100 down 2.69%. The pullback accelerated after a tech-led slide overseas, while concerns about valuation in semiconductors and AI-related memory stocks weighed on sentiment.
U.S. stock-index futures reflected the same risk-off tone, with September S&P 500 E-mini futures down 1.14% and September Nasdaq 100 E-mini futures down 2.58%. The decline also pushed money toward Treasuries, where 10-year yields fell amid safe-haven demand.
Key takeaways
- Price move: The S&P 500 fell 1.26%, while the Nasdaq 100 dropped 2.69%, underperforming on weakness in AI and chip-linked shares.
- Catalyst: Selling in global semiconductors and memory names intensified, with investors questioning whether AI-related spending can be sustained by future returns.
- Rates impulse: U.S. 10-year Treasury yields eased to 4.487%, supported by risk-off flows and a drop in inflation expectations.
- Macro backdrop: A stronger-than-expected June U.S. S&P manufacturing PMI provided some support, but it did not offset equity valuation concerns.
- Implication: Market pricing is still focused on central-bank path risk, with investors monitoring the odds of further rate hikes despite falling yields.
What drove the move
According to market data cited in the report, the selloff began overseas and quickly spilled into U.S. trading. In Asia, Japan’s Nikkei Stock Average fell more than 3% and South Korea’s Kospi closed down more than 10%. The report also cited foreign selling in South Korea amounting to more than $2.5 billion.
Shares tied to AI infrastructure and semiconductors were a central focus of the decline. The report said SK Hynix and Samsung Electronics each closed down more than 12%, triggering forced liquidation linked to margin activity. It added that additional selling was associated with leveraged exchange-traded funds tracking the two chip companies.
In the U.S., chipmakers and memory stocks continued to lead the downward move. The report noted that the iShares Semiconductor ETF fell more than 7% and that several major semiconductor names posted steep losses.
Market reaction across sectors and regions
Beyond semiconductors, the risk-off session pulled down other economically sensitive groups. The report said gold and silver dropped to 1.5-week lows, pressuring mining stocks. It listed multiple miners—such as Coeur Mining, Freeport McMoRan, and Southern Copper—moving lower by mid-single-digit percentages, with others also trailing.
European equities were also weak. The report cited the Euro Stoxx 50 trading at a 1-week low and down 1.27%, while China’s Shanghai Composite ended down 1.37% after retreating from a one-month high. Japan’s Nikkei 225 closed down 3.55%.
European bond markets moved in the same defensive direction. The report said the 10-year German bund yield slid to a 2.5-month low of 2.905% and was down 3.9 basis points to 2.913%. The 10-year UK gilt yield fell 4.1 basis points to 4.767%.
Rates, inflation expectations and what the data showed
According to the report, Treasuries gained as global equities sold off. U.S. September 10-year T-notes were up 7 ticks, and the 10-year Treasury yield fell 2.2 basis points to 4.487%. The report attributed the move to safe-haven demand for government debt as equity markets declined.
It also pointed to easing inflation expectations, citing that the 10-year breakeven inflation rate fell to a 6-month low of 2.217%. However, gains in T-notes were described as limited by supply pressures, with the Treasury scheduled to auction $69 billion of 2-year notes later in the day.
On the macro front, the report said the June S&P U.S. manufacturing PMI unexpectedly rose by 0.6 to 55.7, beating expectations for a decline to 54.6 and marking the strongest reading in four years. It cited market expectations for the Federal Reserve path as well, noting the market was pricing a 36% chance of a 25 basis point rate hike at the next FOMC meeting on July 28–29.
Notable single-stock moves and company-specific headlines
While the broad market fell, individual stories created pockets of strength in both directions. The report said Primoris Services shares dropped by more than 33% after the company cut its full-year profit outlook to between $2.05 and $2.60, down from a prior estimate of $4.80 to $5.00. It also said that Best Buy fell more than 3% after announcing CFO Bilunas will step down at the end of July following 20 years with the company, including seven years as CFO.
Other companies bucked the downtrend. The report cited Edgewell Personal Care Co up more than 13% after rejecting an unsolicited takeover offer from Yellow Wood Partners, stating the $30 per share offer was too low. It also noted gains for CDW Corp after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $170, and for International Business Machines after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $291.
In addition, the report said Avis Budget Group rose more than 4% after entering a settlement agreement with Pentwater Capital Management, which will pay Avis $650 million to resolve a lawsuit related to short-swing profits.
What to watch next
Investors will likely focus on whether semiconductor weakness stabilizes as the session progresses, given that the report described chips as the primary driver of today’s index decline. Next catalysts to watch include upcoming corporate earnings and additional U.S. and overseas economic releases, alongside central-bank pricing changes for the next FOMC and ECB meetings.
