S&P 500, Nasdaq fall as tech selling resumes, Trump vows to react to downed US helicopter

The S&P 500 ⁠and ⁠Nasdaq indexes fell on Tuesday ⁠as a rebound in technology shares faded and as President Donald Trump said ​the U.S. must react to Iran’s shooting down of a U.S. helicopter. 

Trump wrote in a social media post that Iran ‌had shot down the U.S. Apache ‌helicopter that was patrolling the Strait of Hormuz overnight, and vowed to respond, which added to doubts ⁠about prospects for ⁠a truce in the Middle East war.

The Cboe Volatility Index hit its ​highest level since April 7 during the session as stocks sold off.

Technology stocks resumed Friday’s selloff following a bounce on Monday. The S&P 500 tech index fell more than 4% before paring losses. The Philadelphia SE Semiconductor Index dropped as ​much as 8.6% after rising 3% in early trading. 

“When the bounce ran its course this morning, the ⁠tape ⁠came for sale more broadly. ⁠There’s also a ​rotation going on ... so part of it is more of a momentum unwind,” said Michael O’Rourke, chief ​market strategist at JonesTrading in ⁠Stamford, Connecticut.

The Russell 1000 value index outperformed the growth index.

Trump’s post also briefly “created another leg down,” O’Rourke  said.

In addition, investors may be worried ahead of inflation data and a highly anticipated SpaceX IPO later this week.

According to preliminary data, the S&P 500 lost 20.25 points, or 0.27%, to end at 7,385.48 points, while the Nasdaq ⁠Composite lost 254.47 points, or 0.98%, to 25,675.19. The Dow Jones Industrial Average rose 84.28 ⁠points, or 0.14%, to 50,857.58.

Consumer price data for May could offer fresh clues on how the rise in energy prices, driven by the Iran war, is impacting inflation. The data is due on Wednesday.

SpaceX’s market debut on Friday could also be a hurdle for U.S. stocks as investors worry about possible overexuberance among high-growth technology stocks. Elon Musk’s SpaceX is aiming to raise $75 billion and targeting a valuation of $1.75 trillion, the most ever for an IPO.

Some strategists have said investors are potentially booking profits in the high-flying semiconductor stocks to make room for SpaceX in their portfolios. 

Technology ⁠and AI-linked stocks sold off sharply on Friday after Broadcom’s disappointing forecast fueled concerns about high valuations in the sector, particularly in chipmakers, which have rallied sharply this year. The semiconductor index remains up more than 70% for the year so far.

Relief rally, dip-buying or a dead cat bounce? ⁠However you want to characterize Wall Street’s modest rebound on Monday, what is clear is that it was concentrated ​in places you’d expect: tech megacaps that have been in the vanguard of the AI boom. Meanwhile, 60% of the S&P 500 ended in the red again yesterday.

As to Monday’s individual ‌movers, chipmaker Marvell Technology’s inclusion in the S&P ‌500 index helped its stock jump by 9%.

I’ll get into that and more below.

But first, check out my latest column on whether AI could become a public utility.

And ⁠listen to the latest ⁠episode of the Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in ​markets and finance seven days a week.

Where does Monday’s rebound leave us? It’s hard to see past the AI juggernaut with all the IPO hoopla in the background. Elon Musk’s SpaceX is due to list at the end of the week, and OpenAI on Monday said it had also confidentially filed for an IPO. With Anthropic also set to hit this ​summer, the market will be absorbing an unprecedented amount of issuance.