Wall Street moved lower on Tuesday as technology stocks came under pressure. The decline followed a sharp post-earnings drop in Samsung Electronics, which weighed on the broader artificial intelligence trade.
Investor sentiment was also hit by higher oil prices after reports of three tanker attacks in and around the Strait of Hormuz over the past 24 hours.
Markets also watched a key NATO event, where U.S. President Donald Trump met with Türkiye President Recep Tayyip Erdoğan.
Major U.S. Indexes Move Lower
At 11:51 ET, the S&P 500 fell 0.5% to 7,495.89 points.
The tech-heavy Nasdaq Composite dropped 1.2% to 25,799.06 points, while the Nasdaq 100 declined 1.9%.
The Dow Jones Industrial Average also slipped 0.4% to 52,856.43 points.
Samsung Results Pressure the AI Trade
The AI trade had helped Wall Street recover from Middle East tensions in April and May. It also pushed major indexes back toward record highs.
However, after the U.S. and Iran signed an interim peace agreement in mid-June, oil prices returned closer to pre-war levels. This reduced the geopolitical risk premium and shifted investor attention back to the technology rally.
By late June, concerns started to grow that AI-related stocks had risen too far, too fast.
On Tuesday, Samsung Electronics became the main focus after releasing preliminary fiscal first-quarter results and second-quarter guidance.
Samsung Forecast Falls Short of High Expectations
Samsung has been one of the biggest beneficiaries of the AI boom.
Demand for High Bandwidth Memory and traditional DRAM products has surged as major technology companies, including Nvidia, spend heavily on AI computing infrastructure.
This helped lift Samsung into one of South Korea’s largest companies by market value, alongside rival SK Hynix.
For the second quarter, Samsung expects consolidated operating profit of about 89.4 trillion won, or $59.01 billion. It also expects consolidated sales of around 171 trillion won.
The profit figure would mark a record for Samsung and represent a 19-fold increase from the previous year.
However, investors were not impressed. Samsung’s South Korea-listed shares closed nearly 7% lower after the update. SK Hynix also fell more than 6%, while the KOSPI index dropped almost 5%.
Investors Take Profits in AI Stocks
Dan Coatsworth, head of markets at AJ Bell, said Samsung’s earnings growth was extraordinary and reflected the strength of the AI cycle.
However, he noted that investors may have already priced in the good news. Strong memory chip demand and tight supply had already pushed expectations very high.
As a result, some investors appeared to take profits.
Coatsworth also said markets are becoming more cautious about the pace of AI spending and the broader technology sector.
In the U.S., the Philadelphia Semiconductor Index fell 5.6%. The S&P 500 technology sector lost 1.8%.
Chip and memory-related stocks were among the biggest losers on the Nasdaq Composite. These included Intel, Sandisk, Marvell, and Western Digital.
Oil Prices Rise After Tanker Attacks
Away from technology, geopolitical risk returned to the market.
The United Kingdom Maritime Trade Operations agency said it received reports of attacks on three separate oil tankers in and around the Strait of Hormuz.
According to UKMTO, two tankers were hit by unknown projectiles. A third tanker was struck by a drone. No casualties were reported.
Iran has not publicly claimed responsibility for the attacks.
However, Axios reported that Iran’s military had fired on three commercial ships, citing U.S. officials.
Qatar Condemns Attack on Al-Rekayyat
Qatar identified one of the vessels reported to UKMTO as the Al-Rekayyat.
Qatar condemned the attack and said it held Iran fully legally responsible.
It also called on Tehran to immediately stop any actions that threaten regional security or the safety of international maritime navigation.
Iran has previously said that ships passing through the Strait of Hormuz must use routes approved by Tehran. It has also warned vessels to avoid a temporary shipping corridor established by Oman and the International Maritime Organization.
Hormuz Tensions Threaten U.S.-Iran Deal
The latest attacks risk further damaging relations between Washington and Tehran.
Both sides signed an interim peace deal last month. That agreement ended fighting on all fronts and reopened the Strait of Hormuz.
However, tensions had already increased at the end of June after Iranian attacks on ships led to retaliatory U.S. airstrikes.
The new incidents have renewed concerns over shipping security in one of the world’s most important oil routes.
Brent Crude Climbs Around 3%
Oil prices rose on Tuesday as traders reacted to the tanker attacks.
Brent crude futures for September delivery climbed about 3% to $74.11 per barrel.
Despite the move higher, prices remain close to pre-war levels. Brent also recorded its worst quarter since 2020 last week.
NATO Summit and Earnings Also in Focus
Outside the Middle East, investors followed the NATO summit in Türkiye, where President Trump was in attendance.
The U.S. president has recently clashed with European allies, especially over the war in Iran.
Corporate earnings will also become more important this week. Levi Strauss, PepsiCo, and Delta Air Lines are all scheduled to report results.
Investors are also watching SpaceX’s inclusion in the Nasdaq 100 on Tuesday. The event is expected to increase trading volumes and keep attention on the strength of the AI sector.
