US Stock Market Experiences Significant Volatility as Tech Sell-Off Weighs on Indices

US equity markets underwent substantial swings on Tuesday, with the S&P 500 at one point plunging 2.3% before recovering most of those losses, as investors processed news related to conflict in Iran while awaiting economic data that could signal rising inflation.

The S&P 500 closed 0.3% lower, pressured by a rotation out of the technology stocks that have driven the market's gains for much of the year.

The tech-heavy Nasdaq 100 index fell 1.1%, after having dropped more than 4% during the session.

The Philadelphia Semiconductor Index declined 1.9%, with leading chip stocks like Nvidia under pressure. Micron Technology fell 1.4%, and Broadcom dropped 1.1%.

"While we are happy to see tech leading the market, it would be healthier for the rally to broaden out to other sectors," said Bret Kenwell of eToro. "When the leadership is confined to just one corner of the tech industry, the market's foundation becomes a bit shaky."

Data showed the S&P 500's intraday swing from low to high reached 3.4%, marking the second-largest intraday reversal since the Trump administration paused tariffs on dozens of countries in April 2025.

The recent market volatility has kept options traders on alert. Investors are awaiting Wednesday's US Consumer Price Index data to gauge whether volatility could intensify further.

The market's decline accelerated after President Trump stated in the afternoon that the US must respond to Iran's downing of a US military helicopter.

The S&P 500 Equal Weight Index, which reflects market breadth, rose 0.8%, indicating overall market health remained robust outside of chip stocks.

The Information Technology sector was one of the day's worst performers, with an index tracking the "Magnificent Seven" US tech giants falling 1.3%. Microsoft, Tesla, and Apple led the declines.

Nine of the S&P 500's 11 industry sectors closed higher, led by defensive groups. Technology and Energy were the only two sectors to finish in negative territory.

"Market optimism has persisted for months, pushing stock markets to new highs, so anything perceived as negative for equities—whether it's rising inflation or potential rate hikes—could knock the market off balance," said John Cunnison, Chief Investment Officer at Baker Boyer Bank.

At the close, the S&P 500 was down 0.3% at 7,386.65.

The Dow Jones Industrial Average rose 0.2% to 50,872.11.

The Nasdaq Composite fell 1% to 25,678.82.

The Nasdaq 100 declined 1.1% to 29,084.5.

The Russell 2000 index gained 0.4% to 2,867.023.