S&P 500 Falls for Third Day as Chip Selloff and High Yields Squeeze Bull Market

CNBC reported Tuesday that Wall Street extended its losing streak as a chip stocks selloff deepened and surging Treasury yields raised fresh doubts about how much further the equity bull market can run.

The S&P 500 fell 0.6% while the Nasdaq Composite lost 0.7%, marking a third consecutive down session for both indexes. The Dow Jones Industrial Average dropped roughly 391 points, or 0.8%.

Semiconductors Bear the Brunt of the Chip Stocks Selloff

The Philadelphia Semiconductor Index slid 0.6% on Tuesday, extending a two-day decline to more than 6%. Investors appear to be taking profits after a powerful AI-driven rally, with concerns mounting over stretched valuations and the long-term durability of elevated data center spending.

Nvidia shares edged lower for a third straight day ahead of the company’s fiscal first-quarter earnings, due after Wednesday’s closing bell. Qualcomm dropped more than 3% and Broadcom retreated 1.8%.

Jed Ellerbroek, portfolio manager at Argent Capital Management, told CNBC the pullback was understandable after a sharp run higher. He described it as a natural pause arriving just days before the world’s largest chip company is expected to post strong results.

Also Read: Nvidia Earnings Preview: What Analysts Expect From Wednesday’s Report

Bond Yields Add a New Threat

The 30-year Treasury yield climbed to its highest point since October 2023 on Tuesday. The move follows a string of last week’s inflation readings that came in hotter than forecast, partly fuelled by higher oil prices linked to the ongoing conflict in Iran.

Higher borrowing costs threaten to squeeze household spending and have prompted traders to reprice Federal Reserve expectations. Markets are now pricing a greater chance that the Fed’s next move could be a rate increase rather than the cuts investors had been counting on.

A Rally That Had Been Running Hot

Before this week’s stumble, U.S. equities had been on a strong run. The S&P 500 and Nasdaq both notched fresh record highs last week, and the Dow briefly reclaimed the 50,000 level.

Kevin Gordon, head of macro research at the Schwab Center for Financial Research, cautioned that the sharpest gains of this cycle may already be behind the market. He told CNBC that stretched positioning makes it unlikely rallies will match the ferocity seen after the March lows.

Oil markets offered a modest counterpoint. Crude prices eased after President Donald Trump said he had called off planned strikes against Iran following requests from regional leaders to stand down. West Texas Intermediate futures dipped 0.4% to $103.81 per barrel and Brent crude fell 1% to $110.96.

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