U.S. equity markets ended Tuesday in negative territory, pulled lower by a steep decline in semiconductor shares following a cautious outlook from Samsung Electronics. The S&P 500 fell 0.27% to 7,516.76, the Nasdaq Composite slipped 0.64% to 25,954.35, and the Dow Jones Industrial Average edged down 0.27% to 52,915.17, erasing an earlier record high.
Samsung Warning Triggers Chip Rout
The PHLX semiconductor index tumbled 4.4%, paring its year-to-date gain to 74%. Samsung Electronics (SSNLF) said it expects second-quarter sales of approximately 171 trillion won and operating profit near 89.4 trillion won. While those figures are substantial, the guidance failed to reassure investors already concerned about sustainability of the AI-driven chip boom. Micron Technology (MU) lost more than 5%, and SanDisk (SNDK) slid nearly 8%.
"The story of today is the story of the last few weeks," said Zachary Hill, portfolio manager at Horizon Investments. "Money keeps moving after the rally in AI buildout names, and expectations for that group are now almost impossible to beat." Kathleen Brooks, research director at XTB, noted that Samsung's record quarter stoked fears that "the AI chip sales boom cannot be sustained."
Market Breadth Holds Up Despite Tech Weakness
Despite the headline losses, market internals were more resilient. Most S&P 500 sectors ended higher, with advancing stocks outnumbering decliners by about 1.4 to 1. The energy sector gained 1.6% as crude oil prices rose on reports of attacks near the Strait of Hormuz. U.S. crude climbed 2.83% to $70.49 a barrel, while Brent advanced 3.03% to $74.17.
The Dow briefly touched a new intraday record before reversing, dragged down by losses in Caterpillar (CAT) and Goldman Sachs (GS). The reversal underscored narrow tolerance for earnings misses among large-cap stocks, even as underlying breadth held up better.
China Chip Competition Adds Pressure
Adding to the negative tone for chip stocks, Reuters reported that DeepSeek is developing its own AI inference chip, potentially reducing demand for Nvidia (NVDA) and Huawei components. Richard Windsor of Radio Free Mobile commented, "Nvidia is at zero in China and staying there." The news amplified existing concerns about market saturation and geopolitical risks.
SpaceX Slides After Nasdaq 100 Addition
SpaceX (SPCX) dropped about 5% in its first session after joining the Nasdaq 100, less than a month after its June 12 listing. J.P. Morgan had forecast $4.3 billion in passive inflows from the inclusion. "There's nervousness about expectations being too high," said Mark Hackett, chief market strategist at Nationwide.
Other Notable Movers
Fiserv (FISV) gained 2.4% after news that it discussed selling its payments infrastructure business to a consortium of U.S. banks, including JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), and PNC Financial Services (PNC). No agreement has been reached.
U.S. Treasury yields pushed higher, with the 10-year note up 4.41 basis points to 4.523% ahead of the release of Federal Reserve minutes under new Chair Kevin Warsh. The minutes followed a session where big AI names fell while the rest of the market showed relative strength.
