Chip Selloff Drags Wall Street Lower; Oil Rises

The S&P 500 fell 0.5% on Tuesday, dragged by a broad selloff in semiconductor stocks that erased gains from the prior session's tech-led rally. The Nasdaq Composite dropped 0.8%, its worst single-day decline in two weeks.

NVIDIA led the chip rout, sliding 3.2% after a bearish note from a Wall Street analyst warned that the company's data-center revenue growth could slow in the second half of the year as hyperscaler customers optimize existing GPU clusters rather than placing new orders. The note, from a firm that has been bullish on NVIDIA through most of the AI boom, marked a shift in tone that caught some momentum traders off guard.

Advanced Micro Devices fell 2.1% and Intel lost 1.8%, both tracking the broader sector weakness. The Philadelphia Semiconductor Index dropped 2.3%, its steepest fall in a month.

The Dow Jones Industrial Average fared better, closing flat as gains in energy stocks offset the tech weakness. Exxon Mobil rose 1.5% and Chevron added 1.2% as crude oil prices climbed. West Texas Intermediate crude settled at $79.80 a barrel, up 2.1%, after the American Petroleum Institute reported a larger-than-expected drawdown in U.S. crude inventories. Traders said the inventory data, combined with ongoing supply concerns tied to Middle East tensions, pushed oil through the $79 resistance level that had held for most of the past week.

The energy sector's strength kept the S&P 500's loss contained. Utilities and consumer staples also posted modest gains, a rotation into defensive names that traders said reflected caution ahead of Wednesday's consumer price index report. The CPI print is the last major data point before the Federal Reserve's June meeting, and a hot number would complicate the case for rate cuts later this year.

Treasury yields edged higher, with the 10-year note rising to 4.48% from 4.45% on Monday. The dollar index was flat.

In other markets, bitcoin slipped 1.2% to $67,800, extending its range-bound trading pattern as traders awaited clearer regulatory signals from Washington.

Trading volume on U.S. exchanges was 10.8 billion shares, slightly below the 20-day average of 11.2 billion, suggesting many institutional participants were on the sidelines ahead of the CPI release.