New York, June 23, 2026 – US stocks ended sharply lower on Tuesday, with the Nasdaq Composite falling 2.00% in after-hours trading and the S&P 500 losing 1.31%. The Dow Jones Industrial Average managed to slip only 0.04%, but the damage was concentrated in technology shares, particularly semiconductors, as the Philadelphia SE Semiconductor Index plunged 7.6%.
The selloff was led by heavyweights Nvidia (NVDA), Micron Technology (MU), and SanDisk (WDC), which dropped 3.3%, 13%, and 13.6%, respectively. Other chipmakers including Intel (INTC), Marvell Technology (MRVL), and Advanced Micro Devices (AMD) fell between 5.8% and 9.4%, according to Reuters.
Investors are now turning their attention to two key events that could either restore confidence or deepen the rout: Micron’s quarterly earnings report on Wednesday and the Federal Reserve’s preferred inflation gauge, the core PCE index, due out Thursday. Both are seen as critical tests for the AI trade, which has driven much of this year’s market gains.
“Some of the news lately about AI raises questions about all the spending that’s being done,” said Thomas Martin, senior portfolio manager at Globalt. He expressed concern about capital expenditure, the money companies pour into data centers, chip plants, and power systems, as reported by Reuters.
Micron’s results will be scrutinized for signs that demand for AI server memory chips remains robust after the sector’s explosive run. Last week, Reuters reported that Big Tech could push AI spending above $700 billion this year, up from $400 billion in 2025, underscoring the market’s sensitivity to any hints of a slowdown.
Rotation was evident during the session, with defensive sectors gaining. Consumer staples rose 1.7%, healthcare added 1.3%, real estate climbed 1.4%, and utilities gained 0.9%, while information technology dropped 3%, according to FactSet data cited by MarketWatch.
The Dow held up better due to its limited exposure to the chip selloff. IBM, Sherwin-Williams, and Microsoft provided support, but Caterpillar fell 4%, weighing on the index.
Rate expectations are also adding pressure. Traders now see higher odds of a second Fed rate hike by December, reacting to a hawkish Fed led by Kevin Warsh. The core PCE report on June 25 will be the next major data point, as it is closely watched by the Fed to track underlying inflation.
Despite the turbulence, some banks remain optimistic. Barclays and Stifel both raised their S&P 500 year-end targets to 7,800, citing solid earnings. Barclays analysts led by Venu Krishna said the “equity bull case remains intact,” but noted that clearer earnings and more AI capex spending will be needed as Fed support fades. Stifel strategist Thomas Carroll highlighted that stock concentration hit a 40-year high, which may trigger rotation out of megacaps.
Geopolitical tensions eased somewhat after the U.S. granted Iran a 60-day sanctions waiver following early talks tied to a small peace deal. However, mixed signals about nuclear checks and oil sanctions mean Middle East risk has not fully dissipated.
The risks ahead are clear: a soft outlook from Micron could spark doubts about AI demand, while a hot PCE reading might fuel further rate-hike bets and drag on expensive growth names. Conversely, cooler inflation or stronger chip demand could reverse the pressure.
