U.S. stocks traded lower on Tuesday as investors rotated out of high-flying tech names, putting pressure on the broader market after weeks of AI-driven gains. Semiconductor stocks led the decline, with traders locking in profits ahead of key inflation data and Friday’s highly anticipated SpaceX IPO, while lingering geopolitical uncertainty continued to weigh on sentiment.
The S&P 500 fell roughly 1.4%, the Nasdaq Composite dropped 2.5%, and the Dow Jones Industrial Average slipped 0.5%. Despite easing concerns surrounding the Middle East earlier in the session, weakness across chipmakers overshadowed positive economic data, highlighting a growing shift toward financials, healthcare, and other defensive sectors.
Market Movers:
- Applied Digital (APLD) +10%: Shares surged after the company secured a 15-year lease agreement for 210 MW of AI data center capacity with an investment-grade hyperscale customer. The deal could generate $5.2 billion in base revenue and as much as $12.7 billion with renewal options, reinforcing demand for AI infrastructure.
- DraftKings (DKNG) +10%: The online betting giant rallied after reporting continued momentum for its Predictions platform, with annualized consumer volume climbing to $1.3 billion in May. Investors also welcomed management's vision of expanding the platform into a nationwide super app spanning sports betting and prediction markets.
- Roblox (RBLX) +5%: Shares gained after reports that Russian authorities are considering lifting restrictions on the gaming platform. The potential reversal could reopen access to millions of users after the service was blocked late last year.
- Sirius XM Holdings (SIRI) +4%: The satellite radio provider advanced after S&P Dow Jones Indices announced it will join the S&P MidCap 400. Index inclusion often attracts additional buying from passive investment funds and ETFs.
- United Natural Foods (UNFI) -13%: Shares tumbled after the food distributor issued a softer full-year outlook despite returning to GAAP profitability. Investors focused on weaker sales trends, retail margin pressure, and guidance that came in slightly below Wall Street expectations.
- Uranium Energy (UEC) -10%: The uranium producer fell after posting a quarterly loss that missed analyst estimates. While the company continues expanding domestic production capacity, investors were disappointed by weaker near-term profitability.
- Vail Resorts (MTN) -5%: Shares declined after the resort operator lowered its full-year guidance following weather-related disruptions and weaker skier visits. Management also cited softer season pass sales despite ongoing cost-efficiency initiatives.
- IDEAYA Biosciences (IDYA) -3%: The biotech company slipped after announcing a $300 million public offering of common shares and pre-funded warrants. The capital raise will support pipeline development, but created near-term dilution concerns.
Chip Stocks Lose Momentum
After powering markets to record highs over the past several weeks, semiconductor stocks came under renewed pressure as investors rotated into more defensive areas of the market. Micron, Nvidia, and Broadcom all traded lower, extending a broader pullback across AI leaders. The move reflects growing caution over elevated valuations and the possibility that persistent inflation could keep interest rates higher for longer, even as long-term enthusiasm surrounding artificial intelligence remains intact.
OpenAI IPO Plans Add to AI Buzz
The AI race took another major step forward after OpenAI confidentially filed paperwork for an initial public offering, just one week after Anthropic reportedly began a similar process. The potential listings could bring two of the industry's most influential AI companies to public markets later this year, creating another avenue for investors seeking exposure to the rapidly expanding artificial intelligence ecosystem beyond traditional semiconductor names.
Housing Market Shows Signs of Life
Economic data offered a bright spot as existing home sales climbed 3.2% year over year in May, marking one of the strongest performances in three years despite elevated mortgage rates. The improvement suggests buyers are gradually adapting to higher borrowing costs, providing evidence that pockets of the U.S. economy remain resilient even as inflation concerns and geopolitical uncertainty continue to dominate headlines.
Looking Ahead
Markets now turn their attention to upcoming inflation data and Friday's expected SpaceX IPO, two events that could shape sentiment for the remainder of the week. Investors will be watching closely to see whether today's rotation out of technology develops into a broader shift or proves to be another short-lived pause in the AI-driven rally. With corporate AI spending remaining robust, economic data showing resilience, and several high-profile public offerings on the horizon, volatility is likely to stay elevated as traders balance long-term growth opportunities against near-term macro risks.