The Nasdaq Composite reversed from early gains to close down 2.24% at 25,350 on Tuesday, as a fresh wave of selling in semiconductor stocks overpowered optimism from falling oil prices and Middle East ceasefire hopes.
The tech-heavy index experienced a dramatic 3.3% intraday swing, flipping from positive territory in morning trade to sit firmly in the red into the afternoon. The iShares Semiconductor ETF (SOXX) shed nearly 5% during the session, giving back a significant portion of Monday’s 6% rebound rally. That Monday bounce had followed Friday’s brutal 10% plunge, the ETF’s worst single-day performance in six years, as markets questioned whether AI-driven chip valuations had climbed too far, too fast.
Individual semiconductor names bore the brunt of the selling pressure this morning. Marvell Technology tumbled 9.79% to $260.57, erasing $28.28 per share in value despite the stock’s remarkable 253% gain over the past three months. Arm Holdings dropped 7.99% to $318.70, while Qualcomm fell 7.55% to $201.32. Both companies had posted triple-digit percentage gains over the past year, making them prime targets for profit-taking as sentiment soured.
Micron Technology declined 6.1% after staging a 10% comeback on Monday. The memory chip maker had suffered a punishing 20% decline over two days last week, including a 13% rout on Friday. Broadcom, which experienced an equally steep two-day drop last week, fell 4.75% as its Monday rebound fizzled.
Beyond traditional chipmakers, high-beta technology names also struggled. AppLovin plunged 7.75% to $519.98, while Strategy dropped 7.82% to $117.26, extending its one-year decline to 65%.
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Defensive Leadership
While semiconductor stocks crumbled, defensive and quality names outperformed, signaling a clear rotation in market leadership. Starbucks gained 2.98% to $97.65, Cintas advanced 2.71% to $178.35, and Linde rose 2.40% to $513.95. Consumer staples company Mondelez climbed 2.19% to $62.95, while analytics firm Verisk added 2.07% to $182.67.
Markets had opened higher following a 4% decline in West Texas Intermediate crude futures, which fell below $90 per barrel. The energy selloff came after U.S. Energy Secretary Chris Wright stated that ship traffic through the Strait of Hormuz is “rising very meaningfully,” suggesting easing supply constraints in the critical oil chokepoint.
President Donald Trump added to the optimism by suggesting a potential U.S.-Iran deal could be reached within “two or three days” that would reopen the Strait “immediately.” The Strait of Hormuz, which carries approximately 20% of global oil and liquefied natural gas, has seen tanker traffic plunge roughly 90% since late February due to ongoing regional conflicts.
Lower oil prices typically ease inflation concerns and reduce the perceived need for prolonged monetary tightening, creating a supportive backdrop for rate-sensitive growth stocks. However, Tuesday’s price action demonstrated that sector-specific valuation concerns can overwhelm broader macro tailwinds.
