Nasdaq 100 futures sink 1.5% to four-week low on chip rout

Semiconductor stocks dragged U.S. equity futures lower for a second session, sending the Nasdaq 100 to its lowest level in four weeks as investors repriced AI expectations.

The Nasdaq 100 fell 1.5% to a four-week low Tuesday, extending a selloff driven by semiconductor stocks as expectations for AI-related earnings outpaced even blowout results.

"The expectations bar has moved past what even a blowout quarter can clear," said James Hyerczyk, a market analyst and author of two books on technical analysis. "One earnings report pulling global chip stocks lower tells you how stretched the positioning has become."

The Philadelphia Semiconductor Index dropped 5.5%, its steepest decline in four weeks. Intel Corp. plunged 9.7%, Advanced Micro Devices Inc. fell 6.5% and Micron Technology Inc. lost 4.7%. Nvidia Corp. slipped 1.8% after reports that Chinese AI startup DeepSeek is developing its own chip. SpaceX, which owns the xAI business, fell 6.8% in its first session after joining the Nasdaq 100 index. The selloff began in Asia, where Samsung Electronics Co. tumbled 6.9% in Seoul despite reporting operating profit surged roughly 1,800% from a year earlier — a result analysts called strong but insufficient to justify the stock's year-to-date gains.

The rotation out of semiconductors is testing key technical levels. The Nasdaq Composite closed at 25,818.69, down 1.2%, pressing against its 50-day moving average near 25,970. A break below that level could open the door to the 25,000-24,980 support zone, according to Hyerczyk. The S&P 500 fell 0.4% to 7,503.85, while the Dow Jones Industrial Average slipped 130 points, or 0.2%, to 52,925.15 after touching a fresh all-time high of 53,289.30 earlier in the session.

The selling was concentrated in technology, with nine of 11 S&P 500 sectors trading higher. Healthcare and consumer staples led the gainers: Eli Lilly & Co. rose about 3% and Walmart Inc. advanced after announcing price cuts on grocery staples. Financials also attracted buyers, with Fiserv Inc. climbing 3.5% following reports the payments company held discussions with JPMorgan Chase & Co. and Bank of America Corp. about selling its debit card payments infrastructure business. Rivian Automotive Inc. dropped 18.1% after the electric-vehicle maker announced plans to sell 75 million shares, diluting existing shareholders.

The chip rout coincided with a jump in oil prices that added pressure on equities. Brent crude rose 3% to settle at $74.16 a barrel after the British military reported three tankers were struck by projectiles in the Strait of Hormuz. The United States later revoked a license that had authorized the sale of Iranian oil as part of an interim deal, dashing hopes the waterway would fully reopen to tanker traffic. Higher oil prices pushed the 10-year Treasury yield to 4.54%, up from 4.48% on Monday, as traders priced in a greater risk of persistent inflation.

The selloff rippled across global markets. South Korea's Kospi tumbled 4.9%, with Samsung Electronics alone accounting for more than a quarter of the index. Japan's Nikkei 225 fell 2.1% and Germany's DAX lost 1.4%.

Traders are now looking to Wednesday's release of the June Federal Open Market Committee minutes for clues on how Chair Kevin Warsh is approaching monetary policy. The Nasdaq's ability to hold its 50-day moving average will determine whether the semiconductor selloff remains a sector rotation or broadens into a market-wide decline.

This article is for informational purposes only and does not constitute investment advice.