Tuesday for S&P 500 was ugly. Memory chips led everything lower. Nasdaq dropped more than 2%. Then overnight futures started recovering. Here is the full picture.
Tuesday Was a Bad Day for Almost Everyone
S&P 500 fell 1.5% Tuesday. Nasdaq dropped 2.1%. Broad selloff centered on the AI and chip trade that had been carrying markets higher for most of this year.
Semiconductor index plunged roughly 8% in a single session. That kind of move in one day from a major sector index is not normal. It reflects serious doubt starting to build about whether the AI spending story can actually deliver the profits needed to justify how expensive these stocks had become.
The core concern is straightforward. Companies have been spending enormous amounts building AI infrastructure. Data centers. Chips. Power. The spending is real. The question markets started asking loudly Tuesday is whether the revenues and profits that are supposed to justify all that spending are actually going to show up on the timeline investors had priced in.
Micron and Sandisk Took the Most Pain
Memory chip names had the worst session. Micron dropped more than 13%. Sandisk also fell more than 13%. Both wiped out significant portions of their recent gains in a single day.
Memory chips are closely tied to AI demand because large language models and data centers require massive amounts of memory. When the market starts questioning AI spending the stocks most directly tied to that spending get hit hardest. Micron and Sandisk sit right at that intersection.
Selloff did not stay contained to the US. South Korea Kospi fell 10% from recent record highs triggering a market wide circuit breaker halt. SK Hynix and Samsung were both down double digits. What started as concern about US valuations turned into a global technology shakeout very quickly.
Bitcoin lost roughly 3% as risk appetite dried up. Investors moved toward the dollar as a safe haven instead of chasing anything risky.
Futures Were Pointing Higher Overnight
After Tuesday’s losses the overnight picture started looking slightly better. Micron and Sandisk each edged about 1% higher in extended trading. Small move but at least in the right direction.
Micron earnings report is coming and that is now a significant event for market sentiment. If Micron reports strong numbers and gives positive guidance on AI related demand it could calm a lot of the fears that drove Tuesday’s selloff. If the numbers disappoint or guidance is cautious it gives the sellers more ammunition.
Asia overnight was mixed. Japan Nikkei slipped 0.6%. South Korea Kospi bounced more than 3% after Tuesday’s 10% crash. That bounce is encouraging but one day of recovery after a 10% drop does not necessarily mean the problem is resolved. Could be genuine stabilization. Could be people buying the dip before another leg lower. That question does not have a clean answer yet.
SpaceX Found Some Ground Too
SpaceX had briefly fallen below its IPO opening price of $150 during recent sessions. Stock managed to find some footing Tuesday and avoided closing below that level.
That $150 level matters psychologically. It is where the stock first opened for trading after the IPO. Breaking and staying below it would signal that the entire post listing move has been fully erased. For now it is holding but it is a level the market is watching closely.
What Wednesday Needs to Do
Markets need a few things to go right to stabilize from here.
Futures being positive is a start but pre-market moves do not always hold through the session. Real buying needs to show up during regular trading hours to mean anything.
Micron earnings are the next real test for the AI sentiment story. That report will tell markets something concrete about whether chip demand from data centers and AI applications is holding up as strongly as investors had assumed when they were paying much higher prices for these stocks just a few weeks ago.
South Korea recovering more than 3% overnight is helpful context. If Seoul can hold those gains Tuesday’s crash starts looking more like a sharp but temporary correction. If it fades back toward the lows it signals something more persistent is happening.
One week ago markets were celebrating peace deals and record highs. This week they are dealing with circuit breakers and double digit single day drops in major chip stocks. The speed of the shift is a reminder of how quickly sentiment can move when stretched valuations meet any kind of doubt.