US technology stocks fell on Tuesday, influenced by Samsung Electronics' earnings failing to meet investor expectations, reigniting concerns about the sustainability of the fervent artificial intelligence trade.
The tech-heavy Nasdaq 100 Index closed down 1.8%, while the S&P 500 Index declined by 0.5%.
Samsung's shares had tumbled in the Seoul market earlier, dragging down South Korean memory chipmakers and the Kospi index. Although the company's results surpassed analyst forecasts, they fell short of the higher expectations held by buy-side investors.
This disappointment spilled over into the US market, with semiconductor stocks like Micron Technology and SanDisk declining as investors reassessed their outlook for companies benefiting from the AI investment boom.
Michael Purves, CEO and Founder of Tallbacken Capital Advisors, noted, "Given the significant run-up in the chip sector, any sign of weakness in the AI narrative is likely to trigger a sharp sell-off."
Following a new attack on an oil tanker in the Strait of Hormuz, the US Treasury revoked a waiver that had permitted the sale of Iranian oil, driving up crude prices and US Treasury yields.
SpaceX joined the Nasdaq 100 Index on Tuesday, a move expected to prompt portfolio rebalancing by both passive and active funds.
Shares of Rivian Automotive Inc. fell after the electric vehicle manufacturer announced plans to issue 75 million shares to raise capital for fulfilling equity contribution obligations under a loan agreement with the US Department of Energy.
Crinetics Pharmaceuticals Inc. surged 99% after announcing an agreement to be acquired by Vertex Pharmaceuticals Inc. for $85 per share in cash, valuing the company at approximately $10 billion.
Walmart shares gained after the retailer stated it would lower prices on select items.
At the market close, the S&P 500 Index was down 0.5% at 7,503.85 points.
The Dow Jones Industrial Average declined 0.3% to 52,925.15 points.
The Nasdaq Composite Index fell 1.2% to 25,818.69 points.
The Nasdaq 100 Index dropped 1.8% to 29,173.02 points.
The Russell 2000 Index decreased 0.9% to 2,982.488 points.