Dow falls 250 points as chip stocks slide, US-Iran tensions rise

• Semiconductor stocks led losses with Micron down 7.6% and Sandisk falling 9%, despite the VanEck Semiconductor ETF (SMH) gaining 82% in the first half of 2026, its strongest performance since the fund's 2000 launch.
• Markets are pricing in at least one Fed rate hike before year-end as Chair Kevin Warsh reviews policy framework and inflation concerns persist following May job openings hitting a two-year high.
• Fresh US-Iran tensions after Tehran declined to meet US envoys added to market caution, raising concerns about potential disruptions to global energy markets.

Market Summary: Dow Falls on Chip Profit-Taking and Geopolitical Tensions

Key Market Movements

U.S. markets opened lower Wednesday with the Dow Jones falling 253 points, the S&P 500 down 0.46%, and the Nasdaq declining 0.68%. The selloff followed a strong first half of 2026, with the Dow up 8.9%, the S&P 500 gaining 9.6%, and the Nasdaq advancing 12.8%.

Semiconductor Sector Under Pressure

Chipmakers led the decline as investors took profits after an extraordinary rally:

• Micron Technology: Down 7.6% (still up 238% YTD)
• Sandisk: Fell 9% (up 650% in H1 2026)
• Nvidia: Declined 3%
• Broadcom: Down 2.2%

The VanEck Semiconductor ETF (SMH) surged 82% in the first half, its strongest performance since launching in May 2000. Micron, Intel, and AMD collectively added $2 trillion in market cap during Q2 alone.

Market Concerns

Valuation Risk: Analysts warn semiconductor stocks may be overextended after rapid gains.

Fed Policy: Markets are pricing in at least one rate hike before year-end as Fed Chair Kevin Warsh conducts a policy framework review. Job openings hit a two-year high in May, suggesting a resilient labor market that gives the Fed room to focus on inflation.

Geopolitical Tensions: Renewed U.S.-Iran hostilities following failed diplomatic engagement raised concerns about energy market disruptions, adding to cautious market sentiment.

Upcoming Catalysts

Investors await Wednesday's ISM manufacturing data and Thursday's June nonfarm payrolls report for guidance on economic strength and Fed policy direction.

Other News: Nike fell 1.7%, while Shutterstock plunged 30% after Getty Images terminated their $3.7B merger.