The S&P 500 and the Nasdaq Composite were lower on Tuesday as a tech sell-off that began during the prior session picked up steam overnight, with global markets in Asia routed as memory chip-related shares tumbled.
The broad market index fell 1.44% to 7,365.46, while the tech-heavy Nasdaq slid 2.21% to close at 25,587.04. The Dow Jones Industrial Average ended down 45.87 points, or 0.09%, at 51,666.84.
The major averages came off their lows as tech stocks outside of chipmakers such as Microsoft and Amazon as well as defensive stocks like Walmart, Procter & Gamble and Johnson & Johnson rose. Additionally, International Business Machines shares popped 5% following an upgrade to overweight at JPMorgan, while Sherwin-Williams and Merck saw gains as well.
The Nasdaq shed 1.3% in Monday’s session, largely dragged down by shares of Alphabet. The selling then picked up globally with South Korea’s Kospi leading the region’s losses. Memory chip leader SK Hynix, which has led a speculative AI frenzy in the country, closed down more than 12%. The South Korea benchmark, which is up 95% this year, was down almost 10%, while Japan’s Nikkei 225 declined 3.55%, breaking eight sessions of gains.
On Tuesday, U.S.-traded Micron Technology followed suit, with the memory chipmaker down 13%. Sandisk also fell 13%, while components maker Seagate Technology shed more than 5%. Intel pulled back 6%, while Advanced Micro Devices and Qualcomm lost almost 6% and 8%, respectively.
The State Street Technology Select Sector SPDR ETF (XLK) dropped 4%. The VanEck Semiconductor ETF (SMH) fell 7%. Meanwhile, SpaceX moved up about 1%.
Alphabet continued its losing ways, dropping 1%. Shares tumbled 5% on Monday on concerns about high-profile AI talent departures at the company.
“The AI beneficiaries are the sell-off, and I don’t think they’re expensive, but they’re crowded,” said Andrew Slimmon, a senior portfolio manager at Morgan Stanley Investment Management, on CNBC’s “Squawk Box” Tuesday. “It’s captured kind-of the zeitgeist of the momentum traders and when that happens, you’re going to have sharp sell offs like we’re having. I’d argue it’s healthy.”