Summary

Stocks were volatile Tuesday as investors sold artificial intelligence stocks after a recent rally.
The Nasdaq Composite dropped about 1% and semiconductor companies bore the brunt of the selling.
Oil prices pared some losses following a social media post by President Donald Trump about Iran shooting down an Apache helicopter.

AI-generated summary was reviewed by a CNN editor.

New York — 

Stocks sank Tuesday as investors sold AI-related names, expressing caution and taking profits after a strong rally in recent months.

The tech-heavy Nasdaq Composite sank 2.2%, and the benchmark S&P 500 fell 1.3%. The Dow, which has less exposure to tech, fell 250 points, or 0.5%.

The Nasdaq and S&P on Friday had their worst day so far this year before rebounding on Monday. But the sell-off resumed Tuesday.

Wall Street’s fear gauge, the VIX, surged 15%. After an extraordinary rally this year, semiconductor chip makers bore the brunt of the selling.

A popular index that tracks semiconductor companies dropped almost 6%. Broadcom (AVGO) dropped more than 4%. The stock is coming off its worst week in a year and a half after its guidance for chip revenue slightly missed expectations.

Marvell Technology (MRVL), another chipmaker, sank 12%. Nvidia (NVDA), the largest company in the S&P 500 by market value, fell nearly 3%.

Meanwhile, oil prices pared losses after President Donald Trump posted on social media that Iran shot down a US Army Apache helicopter. The two pilots involved are safe and injured, Trump said.

“The United States must, of necessity, respond to this attack,” he said.

Brent crude was down 2.8% to $91.64 per barrel. US crude oil was down 3.5% to $88.11 per barrel. US oil had dropped as low as $86 per barrel before Trump’s post.

The decline in oil prices helped ease nerves about inflation, bringing US Treasury yields lower. But the key 10-year yield remains above 4.5%, potentially pulling investors away from stocks.

Since hitting record highs on June 2, the S&P 500 and Nasdaq are down more than 4% and 6.5%, respectively. All told, the S&P is still up more than 6% this year, and the Nasdaq is up more than 8%.