Nasdaq falls more than 1% as chip stock sell-off continues; tensions between Washington and Tehran weigh on markets

US stocks came under renewed pressure on Tuesday as semiconductor companies led a broad sell-off in the technology sector, coinciding with escalating geopolitical tensions between the United States and Iran, which heightened caution in global markets. The Nasdaq Composite fell 1.2% , weighed down by the sharp decline in chip stocks, while the S&P 500 dropped about 0.5% , and the Dow Jones Industrial Average lost 131 points , or 0.3% .

This decline came after the rebound seen in chip stocks at the start of the week failed to maintain its momentum, as the sell-off from Asian markets spread to Wall Street, putting renewed pressure on artificial intelligence and technology companies. Samsung Electronics was among the biggest losers, with its shares plunging nearly 10% following a drop in investor expectations regarding its future earnings, which negatively impacted investor sentiment across the entire semiconductor sector.

The pressure wasn’t limited to the technology sector; geopolitical developments exacerbated the anxiety after the United States announced a series of military strikes against Iranian targets in response to attacks on commercial vessels in the Strait of Hormuz . Washington also announced tightened sanctions on Tehran, including the revocation of Iran’s oil export license, raising fears of renewed turmoil in energy markets.

These developments pushed oil prices higher, with West Texas Intermediate (WTI) crude rising 2.1% to near $72 a barrel , while Brent crude climbed 1.9% to around $75.5 a barrel . Investors fear that continued high oil prices could fuel inflationary pressures, potentially prompting central banks to keep interest rates elevated for an extended period.

US Treasury yields have also risen as investors reassess their inflation expectations, posing an additional challenge for growth stocks, particularly technology companies, which are negatively impacted by higher yields due to the lower present value of their future earnings.

Despite escalating tensions, US stock futures saw limited movement ahead of Wednesday’s open, with Dow Jones futures down about 50 points , S&P 500 futures holding near previous closing levels, and Nasdaq futures up 0.2% . In Asian markets, technology stocks remained under pressure, with Japan’s Nikkei 225 index falling 0.5% , the Topix index declining 0.3% , and South Korea’s Kospi index dropping 2.2% as chipmakers continued to sell off.

Investors are currently awaiting the release of the minutes from the Federal Reserve’s June meeting , seeking any new clues about the stance of Fed Chair Kevin Warsh and other committee members regarding the future of interest rates. Analysts believe that any indication of continued tight monetary policy could increase pressure on technology stocks, while a less hawkish tone might give markets a chance to recover some of their losses in the coming days.