- SpaceX falls as it joins Nasdaq 100, brokerages launch coverage
- Fiserv jumps on report of debit-network sale talks with US banks
- Chip stocks tumble despite strong Samsung results
- S&P 500 -0.45%, Nasdaq -1.16%, Dow -0.25%
July 7 (Reuters) - The Nasdaq ended sharply lower on Tuesday, weighed down by losses in Micron Technology and other chipmakers due to mounting doubts about the sustainability of Wall Street's AI-driven rally.
Chip stocks in Asia and the United States dropped after memory chip giant Samsung Electronics' blowout earnings report failed to satisfy investors with sky-high expectations.
Micron dropped 4.7% and Sandisk lost 7.3%. That helped send the PHLX chip index down 4.65%, reducing its 2026 gain to about 74%.
Adding to worries about high-flying chipmakers, Reuters reported that Chinese startup DeepSeek is developing its own AI chip, a push that could reduce its dependence on Nvidia and Huawei chips.
Tuesday's chip selloff marked the latest bout of volatility among memory chipmakers and other AI-related stocks as investors worry that sharp gains related to the buildout of AI data centers may have left the shares too pricey.
"The story of today is the story of the last few weeks, and that's rotation after the blistering run in the AI buildout, semis and memory. Expectations have gotten to be almost impossible to beat for these companies," said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.
Another test of the appetite for chip stocks looms on Friday, when South Korean giant SK Hynix's U.S. listing starts trading on the Nasdaq.
Elon Musk's SpaceX fell almost 7% in its first day of trading as part of the Nasdaq 100 index, and after a wave of brokerages initiated coverage on the stock.
Eight of the 11 S&P 500 sector indexes declined, led lower by industrials, down 3.41%, followed by a 2.45% loss in materials.
The S&P 500 declined 0.45% to end the session at 7,503.85 points.
The Nasdaq declined 1.16% to 25,818.69 points, while the Dow Jones Industrial Average declined 0.25% to 52,925.15 points. The Dow briefly hit a record high earlier in the session before losing ground.
Despite the S&P 500's decline, advancing issues in the index outnumbered falling ones by a 1.3-to-one ratio.
Oil prices rose following reports of attacks on vessels near the Strait of Hormuz.
Fiserv climbed 1.8% after media reports that the firm had held discussions with U.S. banks including JPMorgan and Bank of America to sell its payments infrastructure business handling debit card transactions.
U.S. Federal Reserve watchers will get another glimpse into how new Chair Kevin Warsh steers the central bank when it releases the minutes of its latest meeting on Wednesday, the first of his tenure.
Volume on U.S. exchanges was relatively light, with 17.5 billion shares traded, compared with an average of 23.3 billion shares over the previous 20 sessions.
Reporting by Noel Randewich in San Francisco and Shashwat Chauhan and Avinash P in Bengaluru; Editing by Pooja Desai and Matthew Lewis
Source: Reuters