Dow falls 334 points as chip stocks slide

U.S. stocks fell Wednesday, with the Dow Jones Industrial Average down 334 points. The S&P 500 declined about 0.57% and the Nasdaq Composite dropped about 0.82%. Semiconductor companies including Micron Technology, Advanced Micro Devices, Nvidia and Broadcom led losses.

The iShares Semiconductor ETF reversed an earlier bounce and lost about 1% after plunging roughly 10% last Friday and rallying on Monday. The ETF remains up more than 82% for the year. Traders cited profit-taking after a strong AI-driven rally and concerns about stretched tech valuations. Some investors trimmed positions to free cash ahead of an expected SpaceX initial public offering later this week targeting a $75 billion raise at a reported $1.75 trillion valuation.

Escalating U.S.-Iran tensions affected sentiment after reports that a U.S. Army Apache helicopter was downed near the Strait of Hormuz and U.S. forces took action. President Donald Trump wrote that Iran had “taken too long to negotiate a deal that would have been great for them, now they will have to pay the price!!!” West Texas Intermediate crude futures rose about 2% to trade near $90 a barrel, while Brent crude traded above $92.

Economic data showed the Consumer Price Index rose 4.2% year over year in May, matching forecasts and marking the fastest annual increase since April 2023. Core CPI, which excludes food and energy, rose 0.2% month over month, slightly below expectations. CME FedWatch data indicated investors largely expect the Federal Reserve to keep rates unchanged at its June meeting, while futures still price in at least one quarter-point increase before year-end.

Individual stock moves included Super Micro Computer, which fell nearly 13% after announcing a $7 billion capital raise to support AI server demand. Nike shares slipped after a downgrade, and trucking companies including XPO, J.B. Hunt and Old Dominion declined after Amazon said it would expand its freight services.

Semiconductor stocks led U.S. gains earlier this year on investor demand for chips used in data centers and interest in artificial intelligence, producing rapid gains across several large-cap names and leaving the sector susceptible to sharp swings.