Chip stocks lead Wall Street sell-off

The S&P 500 fell to a two-week low on Tuesday, while the Nasdaq Composite sank more than 1%, as semiconductor stocks led declines in the technology sector amid mounting concerns over rising borrowing costs.

The Philadelphia SE Semiconductor Index tumbled more than 5% as investors retreated from stocks that had rallied strongly on booming demand tied to artificial intelligence.

The pullback came as bond yields surged to multi-year highs, reducing how much investors were willing to pay for future growth in technology profits.

Tony Welch, chief investment officer at SignatureFD, said the rise in yields indicated that the Federal Reserve’s policy was probably too accommodative given the outlook for growth and inflation.

He added: “There's nothing that can crack a momentum rally quite like interest rates moving higher and you're getting evidence of that today.”

At 2:25pm ET (18h25 GMT), the Dow Jones Industrial Average had fallen 78.47 points, or 0.15%, to 53,381.31. The S&P 500 lost 43.24 points, or 0.56%, to 7,701.82, while the Nasdaq Composite dropped 324.44 points, or 1.22%, to 26,322.07.

The yield on the 30-year Treasury bond climbed to its highest level since 2007, while the benchmark 10-year yield touched its highest point since January 2025.