MW Are falling tech stocks the start of an overdue selloff - or a well-deserved pause?
By Isabel Wang
After weeks of large-scale alarms that turned out to be false starts, equities finally found a real problem - the one they spent two years celebrating
Summer is here, and highflying tech stocks are falling, dragging down the stock market
Oil fell back to prewar levels. The Federal Reserve held interest rates steady. And still, the stock market was plunging. After weeks of large-scale alarms that turned out to be false starts, equities finally found a real problem - the one they spent two years celebrating.
A rout in global semiconductor companies sent the U.S. stock market sharply lower on Tuesday, with Wall Street's "fear gauge" surging. The Cboe Volatility Index VIX - better known as the VIX, or Wall Street's "fear gauge" - was up 13% to its highest level in over two weeks. The S&P 500 SPX was down 1.2% and the Nasdaq composite COMP skid 1.8%, according to FactSet data.
The selloff in the U.S. market came after extreme trading overnight in Asia, where South Korea's tech-heavy KOSPI index KR:180721 plunged just short of 10%, tripping a circuit breaker that led to a 20-minute trading halt. Shares of both SK Hynix (KR:000660) and Samsung Electronics (KR:005930) ended the session with losses exceeding 12%, according to FactSet.
"The weakness overseas could very well spark a well-deserved pause in some of the high-flyers in the U.S. markets," said Ryan Detrick, chief market strategist at Carson Group.
Memory-chip stocks have been among the biggest winners of the AI-driven rally this year as investors piled into companies positioned to benefit from soaring demand for High-Bandwidth Memory (HBM) used in AI servers. The Roundhill Memory ETF DRAM, which provides exposure to the three companies that dominate the global market share for memory - Micron Technology $(MU)$, SK Hynix and Samsung - had surged 28% this month through Monday, before giving back nearly half of those gains on Tuesday.
"When you see certain sectors go linear or even parabolic, that's at best unpredictable, at worst extraordinarily dangerous," said Steve Sosnick, chief strategist at Interactive Brokers. "Parabolic moves tend to end sharply and unpredictably."
Yet in Sosnick's view, the tech pullback in the U.S. on Tuesday is "hardly a major capitulation." He said it's more of a reminder of "the risks and instability" lurking beneath some of the market's top-performing sectors after an extended run higher.
"Let's not go crazy here," he told MarketWatch via phone. "If you were enjoying the huge runs up that we were getting, this is what you have to deal with from time to time."
Despite the pullback on Tuesday, most of the major U.S. stock indexes remain within striking distance of record territory. The Dow Jones Industrial Average DJIA was trading about 1.3% below its recent high, while the S&P 500 was roughly 3.3% off its peak, according to Dow Jones Market Data.
However, the tech-heavy Nasdaq composite and Nasdaq-100 NDX were worse as investors take profits in some of the market's biggest AI and chip winners. Both indexes were down roughly 5% from recent highs, placing them about halfway toward correction territory, or a fall of at least 10% from a recent peak.
The popular Roundhill Magnificent Seven ETF MAGS, which tracks many of the AI "hyperscalers," was already nearing a close in a correction.
-Isabel Wang
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(END) Dow Jones Newswires
June 23, 2026 12:19 ET (16:19 GMT)
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