US stock indices finished Tuesday's session in negative territory, with the tech-led sell-off that began in the previous session intensifying overnight, dealing a blow to Asian markets where memory chip-related stocks plunged sharply.
The Dow Jones Industrial Average fell 45.87 points, or 0.09%, to close at 51,666.84. The Nasdaq Composite dropped 579.56 points, or 2.21%, to settle at 25,587.03. The S&P 500 index declined by 107.33 points, or 1.44%, ending the day at 7,365.46.
Major indices managed to pull back from their session lows, supported by gains in tech stocks outside of chipmakers—such as Microsoft and Amazon—as well as defensive shares like Walmart, Procter & Gamble, and Johnson & Johnson. Additionally, IBM's stock surged 5% following an upgrade to "overweight" by JPMorgan, while Sherwin-Williams and Merck also posted gains.
The Nasdaq had already fallen 1.3% during Monday's trading, primarily dragged down by Alphabet. The selling pressure then spread globally, with South Korea's KOSPI index leading declines in the Asia-Pacific region. Shares of memory chip leader SK Hynix closed down more than 12%. The South Korean benchmark index, which had risen 95% year-to-date, fell nearly 10% for the day, while Japan's Nikkei 225 index dropped 3.55%, snapping an eight-day winning streak.
On Tuesday, US-listed Micron Technology followed suit, declining 13%. SanDisk also fell 13%, and component maker Seagate Technology dropped over 5%. Intel retreated 6%, while Advanced Micro Devices and Qualcomm fell nearly 6% and 8%, respectively.
The State Street Technology Select Sector ETF (XLK) declined 4%, and the VanEck Semiconductor ETF (SMH) fell 7%. Meanwhile, SpaceX shares gained approximately 1%.
Alphabet extended its losses, falling 1%. The stock had already tumbled 5% on Monday amid concerns over the high-profile departure of AI talent from the company.
Andrew Slemon, a senior portfolio manager at Morgan Stanley Investment Management, commented on Tuesday: "AI beneficiary stocks are being sold off. I don't think they are expensive, but positioning has become too crowded. This captures the zeitgeist of momentum traders, and when that happens, you get a sharp sell-off like we're seeing now. I believe this is healthy."