Dow slides 326 points; Nasdaq down 2.2% in AI-led selloff

U.S. markets opened sharply lower Tuesday as semiconductor and artificial-intelligence stocks led losses. The Dow fell 326 points, the Nasdaq Composite dropped 2.2% and the S&P 500 lost about 1.5%.

The weakness followed Monday’s declines, which hit large-cap technology names including Alphabet, and accelerated in early trading as investors rotated out of AI and chip stocks.

The selloff spread to global markets. South Korea’s Kospi fell nearly 10%, driven by a steep decline in memory chip shares; SK Hynix closed down more than 12%. Japan’s Nikkei 225 slid 3.55%, ending an eight-session winning run.

Individual U.S. chip and storage stocks posted sharp losses. Micron Technology dropped about 12% ahead of its quarterly report scheduled for Wednesday. SanDisk fell nearly 11%, Seagate lost more than 7%, Intel declined roughly 6.4%, Advanced Micro Devices and Qualcomm slid more than 6% and 7% respectively, and Nvidia fell about 3.3%. Alphabet extended losses with a roughly 1.6% decline.

ETF moves reflected the concentration of the rout. The State Street Technology Select Sector SPDR ETF fell about 3.7% and the VanEck Semiconductor ETF declined around 6.4%. In Europe the STOXX 600 dropped about 1%, and the region’s technology sector fell roughly 3%, with ASMI and STMicroelectronics each down over 6%.

Investors questioned whether large technology companies can sustain heavy spending on AI infrastructure, noting some firms have increased borrowing to finance expansion. That concern, together with profit-taking and crowded positions in momentum trades, contributed to the pullback in AI-related names.

LSEG data showed traders have increased the probability of a second U.S. interest-rate increase by December. Private surveys of June business activity were scheduled for later Tuesday, and the Personal Consumption Expenditures Index, the Federal Reserve’s preferred inflation gauge, is due on Thursday.

Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management, described positions in AI beneficiaries as “crowded” and characterized the selling as “healthy.”

Other market moves included a roughly 2.5% drop in SpaceX shares, adding to multiple-session losses that erased more than $600 billion of the company’s market value over the prior three sessions. Traders were also monitoring diplomatic developments after the United States waived sanctions on Iran for 60 days following talks tied to a tentative peace agreement.

Earnings reports and economic releases this week could keep volatility elevated as market participants reassess growth forecasts, corporate spending plans in the technology sector and the outlook for interest rates.