Nasdaq reverses from 1.2% gain to 1% drop as tech stocks slide

The Nasdaq Composite swung from a 1.2% gain to a 1% decline Tuesday, as a broad selloff in technology stocks erased early-session gains. The S&P 500 fell 0.53% while the Dow Jones Industrial Average slipped 0.11%.

The reversal lacked a single identifiable catalyst, with traders pointing to profit-taking in mega-cap technology names and positioning adjustments following last week's violent unwind of the "Parabolic 7" trade. The selloff was concentrated in semiconductor and hardware stocks — the same names that had powered the Nasdaq's rally and were at the center of the AI infrastructure complex that saw Micron plunge 13% on June 5.

Apple dropped 3.02%, the steepest decline among mega-cap tech stocks and a significant drag on the broader market given its index weighting. AMD fell 3.1%, while ARM Holdings and Qualcomm each tumbled more than 5%. Nvidia lost 1.71%, Broadcom fell 2.53%, and Micron Technology declined 2.5%. Tesla slid 1.68% and Microsoft dropped 1.38%. Meta Platforms bucked the trend, rising 0.86%, while Alphabet edged up 0.04%. Taiwan Semiconductor Manufacturing Co. fell 0.74% and Amazon slipped 0.18%.

The breadth of the selloff was notable: of the major tech names tracked, only Meta and Alphabet ended in positive territory. The concentration of losses in semiconductor stocks — the primary beneficiaries of AI infrastructure spending — suggests the rotation out of AI-related names that began on June 5 may have further to run. On that Friday, Micron had plunged 13% to $864.01 and other memory names sold off heavily as leveraged accounts were forced to unwind positions in what traders described as a sentiment-driven flush.

The intraday reversal shows how quickly the tech rally can reverse after an extended run. The Nasdaq's failure to hold gains above the prior session's close may set a cautious tone for the remainder of the week, with investors watching for macro data or Fed commentary that could shift the narrative. The technology sector's elevated valuations leave it vulnerable to further profit-taking if fresh catalysts fail to materialize, particularly with semiconductor names trading at multi-year valuation premiums and the AI trade showing signs of exhaustion after months of relentless buying. The June 5 unwind of the "Parabolic 7" trade demonstrated how quickly forced selling can cascade through leveraged accounts when momentum reverses, a dynamic that may keep traders cautious on adding long exposure in the near term.

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