Nasdaq falls as chip stocks slide ahead of Fed, Big Tech earnings

• The Philadelphia Semiconductor Index has fallen more than 20% from its June peak, with Micron down 7.4%, Intel down 5%, and Applied Materials down 5.6% in Tuesday's session
• Markets expect the Fed to hold rates steady Wednesday, though traders are pricing in a possible 25-basis-point increase later this year as concerns mount over AI capital spending and financing pressure
• Oil prices declined with Brent crude falling 1.7% to $86.82 per barrel as diplomatic talks continue over reopening the Strait of Hormuz and a fragile U.S.-Iran ceasefire holds

Market Summary: Nasdaq Falls on Chip Stock Weakness

Market Performance:

US markets opened mixed on Tuesday, with the Nasdaq Composite declining 0.67% and the S&P 500 falling 0.15%, while the Dow Jones Industrial Average gained 0.59%. The divergence was driven by sector-specific weakness in semiconductors offset by strong consumer stock performance.

Semiconductor Sector Selloff:

Chip stocks extended significant losses amid concerns over AI infrastructure spending and Chinese competition. Key declines included:

• Micron Technology: down 7.4%
• Intel: down 5%
• Applied Materials: down 5.6%
• VanEck Semiconductor ETF (SMH): fell 3.3%
• Philadelphia Semiconductor Index: down over 20% from June record high

The Roundhill Memory ETF has traded below its 50-day moving average for two consecutive weeks, signaling deteriorating momentum. Investor concerns center on rising AI capital expenditure burn rates highlighted by recent Alphabet and Tesla results, plus competitive pressure from lower-cost Chinese AI models.

Key Market Catalysts:

Investors await earnings from major tech companies—Microsoft, Amazon, Meta Platforms, and Apple—which will provide critical insights into AI spending trends. The Federal Reserve's policy decision Wednesday is also in focus, with markets expecting unchanged rates but pricing potential for a 25-basis-point increase later this year.

Other Developments:

Oil prices declined, with Brent crude falling 1.7% to $86.82/barrel and WTI dropping 1.6% to $81.31/barrel, driven by easing Middle East tensions and diplomatic progress on Strait of Hormuz shipping access.

Consumer stocks provided support: Coca-Cola, Walmart, and Procter & Gamble each gained over 2%. Johnson & Johnson rose after announcing a $5.5 billion talc lawsuit settlement.