Chip Stocks Drag Futures Lower as Yields and Valuation Fears Bite

U.S. equity futures slid Tuesday morning, CNBC reported, as a sustained sell-off in chip stocks compounded pressure from bond yields approaching multi-year highs. S&P 500 futures fell 0.5% and Nasdaq 100 futures dropped 0.8%, extending losses for a second consecutive session.

Chip Stocks Take the Brunt of the Selling

The Philadelphia Semiconductor Index shed roughly 6% over just two trading days. Micron Technology dropped 2% in pre-market trading, heading for a fourth straight day of declines. Investors have grown uneasy that the AI-fueled rally in memory chipmakers has outpaced underlying fundamentals. Micron’s peer Seagate Technology fell another 3% Tuesday after losing 7% on Monday, when the company flagged challenges keeping pace with demand. Nvidia, scheduled to report fiscal first-quarter results after Wednesday’s closing bell, edged down 0.8% in early trading, its third consecutive decline.

Seaport Research analyst Jay Goldberg cautioned on Monday that semiconductor valuations had run ahead of reality. “We think the semis market is going to be choppy in the near-term,” he wrote, adding that Nvidia in particular faces a combination of elevated expectations and genuine supply constraints.

Background: A Rally That Reached Record Heights

Heading into last week, both the S&P 500 and Nasdaq Composite had printed fresh all-time highs. The Dow Jones Industrial Average briefly reclaimed the 50,000 mark. That momentum was powered largely by surging data-center spending and AI chip demand, which sent stocks like Micron and Nvidia on extraordinary runs. Micron remains up more than 138% for the year despite the recent pullback. Portfolio manager Jed Ellerbroek of Argent Capital Management described the current weakness to CNBC as “a well-deserved breather after an epic rally,” noting the timing ahead of a pivotal Nvidia earnings report added to the volatility.

Kevin Gordon, head of macro research at the Schwab Center for Financial Research, offered a more cautious read. He told CNBC’s Closing Bell that stretched positioning likely means the sharpest rallies seen off March’s lows are already behind the market.

Rising Yields Add a New Pressure Point

Bond markets are complicating the picture further. The 30-year Treasury yield hovered around 5.15% Tuesday, close to its highest reading since 2023. The 10-year yield also touched its loftiest level since early 2025 during Monday’s session. The move follows a string of last week’s inflation data showing price pressures re-accelerating, partly on the back of elevated oil costs tied to Middle East tensions. Markets are now pricing in the possibility that the Federal Reserve’s next move this year could be a rate increase rather than the cut investors had anticipated.

Crude oil eased modestly Tuesday after President Donald Trump announced he had called off a planned strike on Iran at the request of regional leaders. West Texas Intermediate futures fell 0.4% to $103.81 per barrel, while Brent crude dropped 1% to $110.96.

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