S&P 500 Falls for Third Day as Chip Stocks Continue to Decline, High Yields Threaten Bull Market

Stocks fell Tuesday as a sell-off in chip names, which have led the A.I.-driven bull market, continued.

Traders also kept an eye on the oil market following President Donald Trump’s cancellation of planned attacks on Iran, as well as bond yields hovering near multi-year highs, which threatened to put more pressure on the U.S. consumer.

Shares of Micron were also down 2%, set for their fourth-straight day of declines on concerns the A.I. run in memory chipmakers in particular has gone too far, too fast. Micron is still up more than 138% this year. The stock fell on Monday after peer Seagate Technology fell 7% after warning about keeping up with demand. Seagate was down another 3% on Tuesday.

The Philadelphia Semiconductor Index is down 6% in two days as investors take profits on concern about valuation and the sustainability of sky-high data center spending. Nvidia, which will report its fiscal first-quarter earnings after the bell on Wednesday, headed for its third-straight decline, down 0.8% in pre-market trading.

Crude prices were down Tuesday after President Donald Trump announced late Monday that he was calling off a plan to attack Iran after the heads of three regional powers in the Middle East asked him to “hold off.” West Texas Intermediate futures shed 0.4% to $103.81 per barrel in early trading. Brent crude lost 1% to $110.96. Trump’s post also helped the S&P 500 and Nasdaq recover some losses late in the session Monday, though they still ended lower for a second day in a row.

Stocks had been on a tear before the past few sessions, with the S&P 500 and Nasdaq hitting fresh record highs last week, and the Dow briefly recapturing the 50,000 level. However, Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research, believes that the market rally has already seen its best days.