Dow Falls Over 500 Points, Nasdaq Sinks As Tech Stocks Tumble — Wells Fargo Warns 'Sugar Rush' Behind Recent Surge Likely Over

• According to a Bloomberg report, Wells Fargo analyst Ohsung Kwon warned that the “sugar rush” behind the recent stock surge is likely over.
• Kwon pointed to last Friday's 4% Nasdaq selloff, the index's worst single-day fall since April 2025, as a reminder of the risks associated with the AI trade.
• Bank of America Securities strategists warned in a note last week that “there are too many red flags” regarding U.S. stocks and advised investors to take profits.

U.S. equities declined in Tuesday morning’s trade, erasing initial gains amid a broader decline in technology stocks after a surge on Monday.

The Dow Jones Industrial Average (DJIA) fell more than 570 points before recouping some of the losses. The S&P 500 index was down about 2.2%, while the Nasdaq Composite tumbled nearly 3.6%.

Chip stocks fell across the board, with Nvidia Corp. (NVDA) shares down about 4% at the time of writing. Shares of Intel Corp. (INTC), Micron Technology Inc. (MU), Marvell Technology Inc. (MRVL), Advanced Micro Devices Inc. (AMD), and ARM Holdings (ARM) fell between 8% and 14%.

The iShares Semiconductor ETF (SOXX) was down about 8% at the time of writing.

Wells Fargo Warns ‘Sugar Rush’ Likely Over

According to a Bloomberg report, Wells Fargo analyst Ohsung Kwon warned that the “sugar rush” behind the recent stock surge is likely over. Kwon added that the selloff in tech stocks on Friday last week highlighted the risks of piling onto the AI trade.

The Nasdaq Composite closed on Friday last week with a 4% fall, its worst single-day decline since April last year.

“With the war still going on and Hyperscalers raising capital to fund capex, we believe the narrow ‘buy semis’ trade will return,” Kwon stated in a note. “But the ‘sugar high’ rally is now likely over, and we expect the speed of rally to slow,” he added.

Per another Bloomberg report, Bank of America Securities strategists warned in a note last week that “there are too many red flags” regarding U.S. stocks, advising investors to take profits instead.

According to the report, the strategists also noted that 70% of bear market signposts had been triggered, which was in line with the average observed during previous market peaks.

UBS Expects A Fed Rate Cut This Year

UBS Global Wealth Management’s Alan Rechtschaffen said during an interview with CNBC on Tuesday that worries about the Federal Reserve’s monetary policy direction are weighing on tech stocks.

“People are concerned the market is pricing in Fed raises for the rest of the year. UBS thinks the Fed is actually going to cut rates,” he added.

Rechtschaffen also stated that the pipeline of tech IPOs this year indicates that the U.S. is in a transformational period.

“There’s new technologies, between AI, longevity, power… there are things that are happening that never happened before and we’re in, like, a Star Trek generation,” he added.

Crude Oil Prices Fall

Meanwhile, crude oil prices fell on Tuesday, with the U.S. West Texas Intermediate (WTI) crude futures maturing in July falling 2.37% to hover around $89.34 per barrel. Brent crude futures maturing in August fell 1.88%, hovering at $92.48 per barrel.

The United States Oil Fund ETF (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) were down nearly 2% at the time of writing.

President Donald Trump said early Tuesday that a deal with Iran could be reached in “two or three days,” according to a report by CNN. “The strait will open up right away. It’ll open up immediately upon signing, which could be in two or three days,” Trump added.

Meanwhile, Trump stated in a post on Truth Social that the Iranians shot down one of the Apache helicopters during a patrol over the Strait of Hormuz.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 1.96%; the Invesco QQQ Trust ETF (QQQ) fell 3.61%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.91%. Retail sentiment on Stocktwits regarding the S&P 500 ETF was in the ‘bullish’ territory.

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