S&P 500, Nasdaq, Dow Drop As Broader Tech And AI Selloff Continues — SPCX, BLZE, WMT, WEN, MU In Focus

• The S&P 500 and the Nasdaq 100 fell 1.4% and 3.3%, respectively, while the Dow Jones fell 0.1%.
• The VanEck Semiconductor ETF (SMH) tanked 7%. 
• All eyes on Micron earnings after the bell on Wednesday. 

U.S. stock indices dropped on Tuesday as the broader tech sell-off extended from the previous session. Investors began to doubt the longevity of the AI boom, with attention shifting to the upcoming Micron earnings to gauge the strength of AI demand.  

The S&P 500 fell 1.4%, the Nasdaq lost 3.3% and the Dow Jones dropped 0.1%. The Russell 2000, which tracks stocks with small market capitalizations, fell 1%. 

Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY) slipped 1.3% and Invesco QQQ Trust (QQQ) ended Tuesday around 3% lower, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) ended flat. 

Meanwhile, the VanEck Semiconductor ETF (SMH) tanked 7%, led by weakness in Micron (MU), Broadcom (AVGO) and Nvidia (NVDA) shares. 

However, retail sentiment on Stocktwits for SPY was ‘bearish,’ while sentiment for QQQ and DIA was ‘bullish,’ with ‘normal’ to ‘high’ message volumes.

US Market Drivers

Technology stocks and the larger AI play has hit a roadblock since the beginning of the week as investors look for signs that justify the demand for AI on the back of multi-billion dollars in capex planned by hyperscalers. 

“The risk-off trade reflects fear AI exuberance may be overdone,” said Chris Low at FHN Financial in an interview with Bloomberg.

The drop in South Korean equities also fueled investor concerns that the recent boom in tech and AI stocks might be overblown. Samsung and SK Hynix - two stocks that are currently dominating the memory chip play globally fell on Tuesday. Moreover, foreign institutional investors offloaded about $2.5 billion of Kospi shares. 

Trending Stocks To Watch 

SpaceX (SPCX): Retail investors reportedly bought over $400 million of SpaceX (SPCX) stock during its first five trading sessions, and its inaugural bond offering drew demand exceeding three times its outstanding long-term debt. 

Backblaze (BLZE): The company struck a $335-million, five-year deal with cloud computing company CoreWeave (CRWV) for storage capacity.    

Walmart (WMT): The retail giant announced two deals: a nuclear power purchase agreement with Constellation and the acquisition of Vibe.co, a self-serve connected TV (CTV) advertising platform.  

Wendy’s (WEN): The fast-food chain caught investors' attention on Tuesday after appointing an industry veteran as its next finance chief amid its overseas expansion strategy to counter slowing growth in the U.S. 

Micron Technologies (MU): Investors await its quarterly results on Wednesday, while BofA hiked its price target on Micron by 58% to $1,500 from $950, while keeping a ‘Buy’ rating. 

Read More: SPCX Stock Sees Record Retail Frenzy — SpaceX Logs Over $400M Inflows In First Week Post-IPO, Says Vanda Research

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