BY EMMANUEL OGBONNA
Wall Street came under renewed pressure on Tuesday as another wave of selling in artificial intelligence-related stocks weighed heavily on the broader market, while rising oil prices and renewed tensions in the Middle East added to investor concerns about inflation and global economic growth.
The latest downturn extended the recent volatility that has swept through the technology sector, with several of the market’s biggest AI-driven companies suffering sharp declines after months of extraordinary gains. Investors continued to reassess whether the industry’s massive investments in artificial intelligence infrastructure can generate enough long-term profits to justify soaring company valuations.
By early afternoon trading, the S&P 500 had fallen 0.3%, despite most companies within the benchmark index posting gains. The losses were concentrated primarily among large technology and semiconductor stocks, which have been the driving force behind much of the market’s rally over the past year.
The Nasdaq Composite, which is heavily weighted toward technology companies, dropped 0.7%, reflecting continued weakness across the AI sector. Meanwhile, the Dow Jones Industrial Average declined by 173 points, or approximately 0.3%, as investors balanced strength in some industries against steep losses in technology.
The selling pressure began earlier in Asian markets, where South Korean technology giant Samsung Electronics experienced one of its sharpest single-day declines in months. Shares of the company tumbled 6.9% in Seoul despite reporting preliminary second-quarter financial results that exceeded expectations.
Samsung announced that it expects its operating profit for the quarter to surge by roughly 1,800% compared with the same period a year earlier, highlighting the strong recovery in the semiconductor industry and continued demand for advanced memory chips used in artificial intelligence applications.
Although analysts described the earnings outlook as significantly stronger than anticipated, investors remained cautious. Samsung’s stock had already more than doubled in value since the beginning of the year, prompting many traders to lock in profits after the company’s remarkable rally.
The reaction reflected a broader trend that has emerged across global technology markets in recent weeks. Many AI-focused companies have seen increased volatility as investors question whether stock prices have climbed too far, too quickly.
Concerns remain that the enormous sums being invested in artificial intelligence—including billions of dollars for advanced semiconductor production, cloud computing infrastructure and massive data centers—may take longer than expected to generate sustainable returns.
Among the hardest-hit stocks on Wall Street was Micron Technology, whose shares fell 6.1%, making it one of the largest contributors to the S&P 500’s decline during the session.
Intel also suffered significant losses, with its stock dropping 9.2% as investors continued rotating away from semiconductor companies that have experienced substantial gains over the past year.
Nvidia, the world’s most valuable publicly traded company and one of the biggest beneficiaries of the artificial intelligence boom, managed to recover from earlier losses and traded 0.9% higher by the afternoon. The rebound helped limit what could have been even steeper declines across the broader market, given Nvidia’s enormous influence on major stock indexes.
Another notable decliner was SpaceX, whose shares fell 5.2% during their first trading session after the company’s inclusion in the Nasdaq-100 Index. Investors appeared to take profits despite the milestone, contributing further weakness to technology-related stocks.
Outside the technology sector, pharmaceutical companies also attracted investor attention following a major acquisition announcement.
Vertex Pharmaceuticals announced that it had agreed to acquire Crinetics Pharmaceuticals in an all-cash transaction valued at $85 per share. The acquisition is expected to strengthen Vertex’s portfolio by adding therapies focused on endocrine diseases.
Shares of Crinetics Pharmaceuticals surged nearly 99% following the announcement, reflecting the substantial premium offered to shareholders. Vertex stock, meanwhile, slipped 0.5% as investors evaluated the financial impact of the acquisition.
The electric vehicle sector also faced pressure after Rivian Automotive announced plans to sell 75 million additional shares of common stock. The move is expected to raise fresh capital but will dilute the ownership stakes of existing shareholders.
Following the announcement, Rivian shares plunged 14.5%, making the company one of the weakest performers of the trading session.
Investor sentiment was also affected by developments in the Middle East after reports that three commercial tankers had been struck by projectiles while passing through the Strait of Hormuz, one of the world’s most strategically important energy shipping routes.
The attacks renewed concerns that geopolitical tensions could once again disrupt global oil supplies just as hopes had begun to emerge for greater stability following months of conflict involving Iran.
The Strait of Hormuz serves as a critical passage for a significant share of the world’s oil exports, and any disruption to shipping through the waterway has the potential to influence global energy markets.
Following news of the attacks, oil prices climbed sharply.
Brent crude, the international benchmark for oil prices, rose approximately 3% to $74.12 per barrel as traders priced in the possibility of renewed supply risks.
Higher energy prices have revived concerns about inflation, which has remained one of the primary challenges facing central banks around the world.
Rising fuel costs can increase transportation expenses, manufacturing costs and consumer prices across numerous industries, potentially forcing policymakers to maintain higher interest rates for longer than previously anticipated.
Those concerns were reflected in the bond market, where U.S. Treasury yields moved higher.
The yield on the benchmark 10-year U.S. Treasury note increased to 4.52% from 4.48% a day earlier, signaling that investors expect borrowing costs could remain elevated if inflationary pressures persist.
Higher bond yields generally make borrowing more expensive for businesses and consumers while reducing the appeal of riskier assets such as stocks, particularly high-growth technology companies whose future earnings are more sensitive to interest rate changes.
Global markets have remained uneasy after oil prices surged above $100 per barrel earlier in the summer during the height of the conflict involving Iran. Investors continue to worry that another prolonged increase in energy prices could slow economic growth while delaying expected interest rate cuts by the U.S. Federal Reserve and other major central banks.
Stock markets across Asia and Europe also finished the day lower.
South Korea’s Kospi Index fell 4.9%, with Samsung Electronics accounting for a substantial portion of the decline due to its significant weighting within the benchmark index.
Japan’s Nikkei 225 dropped 2.1% as technology shares tracked Wall Street’s weakness, while Germany’s DAX Index declined 1.4% amid growing concerns over both global economic growth and renewed geopolitical risks.
The combination of renewed selling in artificial intelligence stocks, higher oil prices, rising Treasury yields and escalating geopolitical tensions created a cautious atmosphere across global financial markets. Although many sectors outside technology remained relatively resilient, investors continue to closely monitor whether the AI-driven rally that fueled record stock market gains can withstand mounting concerns over valuations, inflation and international uncertainty.
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