Global equity markets experienced notable declines Tuesday as shares in artificial intelligence (AI) companies retreated, pulling major indexes lower. In the United States, the Standard & Poor’s 500 index dropped 0.4% to close at 7,503.85, despite gains in most of its constituents. The tech-heavy Nasdaq composite fell 1.2% to 25,818.69, while the Dow Jones industrial average decreased 0.2%, losing 130.76 points to end at 52,925.15.
The downturn in AI stocks was a significant factor behind the market weakness. On Wall Street, shares of AI-related semiconductor companies slid sharply amid concerns that valuations had surged excessively and that the anticipated productivity and profit gains from AI investments may not justify the current market enthusiasm. Advanced Micro Devices declined 6.5%, Intel dropped 9.7%, and Micron Technology fell 4.7%, collectively exerting downward pressure on the broader market. SpaceX, which owns the artificial intelligence firm xAI, tumbled 6.8% on its debut in the Nasdaq 100 index.
In Asia, the sell-off began with a steep fall in Samsung Electronics shares, which dropped 6.9% in Seoul. The company had released a preliminary forecast indicating a substantial operating profit increase of approximately 1,800% year-over-year for the second quarter. Despite the strong results, investors appeared unswayed, likely reflecting expectations for gains that had already been priced in following the stock’s doubling over the past year. The slump in Samsung shares also weighed heavily on South Korea’s Kospi index, which declined by 4.9%. Japan’s Nikkei 225 and Germany’s DAX also posted declines of 2.1% and 1.4%, respectively.
Beyond the technology sector, some notable corporate movements influenced market activity. Vertex Pharmaceuticals fell 1.4% after announcing a cash acquisition deal for Crinetics Pharmaceuticals at $85 per share; in contrast, Crinetics surged 98.7% on the news. Meanwhile, electric vehicle maker Rivian Automotive experienced an 18.1% drop following its announcement of a 75 million share stock sale, a move expected to dilute existing shareholders’ stakes.
Broader market concerns were amplified by geopolitical tensions and rising commodity prices. The British military reported three tankers struck by projectiles in the Strait of Hormuz, a key artery for global oil shipments. In response, the United States revoked a license that had allowed Iranian oil sales under an interim U.S.-Iran agreement aiming to reduce regional conflict, diminishing hopes for unrestricted passage through the strait.
Energy markets reacted with Brent crude oil prices climbing 3%, settling at $74.16 per barrel. The increase contributed to inflationary pressures and pushed U.S. Treasury yields higher, with the 10-year note yield rising to 4.54% from 4.48% on Monday and substantially higher than its pre-conflict level of 3.97%. Elevated yields globally have unsettled investors since oil prices surged above $100 per barrel in March amid geopolitical strife, raising concerns that central banks, including the Federal Reserve, may intensify interest rate hikes to combat inflation. Such monetary tightening could slow economic growth and weigh on investment valuations across asset classes.