U.S. stocks fell sharply on Tuesday, with the Nasdaq Composite dropping 3% and the S&P 500 losing 1.7%, as a one-day rebound in chip stocks reversed course and optimism over a possible U.S.-Iran deal gave way to fresh uncertainty, according to CNBC.
The Dow Jones Industrial Average shed roughly 354 points, or 0.7%. Markets had opened higher as oil prices retreated and President Donald Trump told reporters on Monday that the two sides were “very close to having a good strong powerful deal” that could reopen the Strait of Hormuz, according to The Wall Street Journal. Trump later said Tuesday that the U.S. “must respond” to Iran, contributing to the reversal in stocks.
West Texas Intermediate crude futures fell more than 5% to trade below $90 a barrel. U.S. Energy Secretary Chris Wright said Strait of Hormuz ship traffic is “rising very meaningfully.”
Chip stocks led the decline. After staging a 6% recovery on Monday, the iShares Semiconductor ETF reversed sharply, falling nearly 7%. The PHLX Semiconductor Index fell 7%. Marvell Technology stock dropped 14%, Micron Technology stock fell about 8%, and Broadcom stock lost 5%. Apple, Intel, and AMD stock each fell 3% or more.
Both stocks had suffered severe losses earlier in the week: Micron’s two-day slide last week totaled around 20%, with Friday accounting for a 13% plunge, while Broadcom endured a comparably punishing stretch over the same period.
Late Monday, OpenAI submitted a confidential IPO filing, adding another marquee name to a busy week for markets. Friday’s expected stock market arrival of SpaceX — valued at $1.75 trillion and widely seen as a hybrid space-and-AI enterprise — would set a record as the biggest public offering in history. Analysts have pointed to the imminent listing as a possible reason investors are trimming positions in established tech names to make room for the new entrant, according to the Journal.
Jay Hatfield, CEO of Infrastructure Capital Advisors, said he thinks the SpaceX listing may have contributed to Friday’s initial sell-off. “I think everybody’s a little nervous,” Hatfield said. “I think we’re going to be choppy until we get that behind us.”
Tehran’s foreign ministry said that Iran had stood down its military campaign against Israel on Monday, though it reserved the right to restart strikes should Israeli operations in Lebanon press on. Netanyahu pushed back on any suggestion the fighting was finished, saying Monday evening that the standoff with Iran and Hezbollah remained unresolved.
