Tech shares led a market retreat as investors reassessed artificial intelligence-driven gains, sending the Nasdaq lower for a second straight session and marking its sharpest two-day slide since April. According to Reuters via Yahoo Finance, chipmakers and major technology names were among the biggest drags while broader sector rotation took hold.
AI jitters and sector rotation weigh on indexes
The report said the Nasdaq Composite fell about 2.4% over two days. The semiconductor index declined 1.5%, and information technology was the second-largest decliner in the S&P 500, down 1.1% on Wednesday. Market participants pointed to a technical pullback after a strong rebound since early April and growing questions around the pace of AI-related capital spending.
Analysts cited additional pressure from concerns about government interference, with the Trump administration considering equity stakes in chip companies such as Intel in exchange for CHIPS Act grants. Several strategists framed the move as profit-taking and rebalancing after outsized gains in megacap tech.
What strategists are saying
Art Hogan of B. Riley Wealth Management noted technology’s 40% rise from April lows and said a rotation could benefit the rest of the S&P 500, adding that speculative AI-linked names have faced sharper selling. Michael Ashley Schulman of Running Point said the decline looked like “multiple compression meeting a little margin math,” with Nvidia, AMD, and Palantir among the drags, and referenced the impact traders associated with DeepSeek’s update.
Brian Jacobsen of Annex Wealth Management pointed to sensitivity to “even a scent of bad news,” mentioning a valuation warning and a restructuring at an AI division as factors that intensified the move. Phil Blancato of Ladenburg Thalmann Asset Management characterized the action as profit-taking that could reverse if the Federal Reserve signals a rate cut.
Policy signals and market mechanics
Steve Sosnick of Interactive Brokers said the selloff resumed before dip buyers stepped in late morning, attributing early weakness to profit-taking and risk reduction ahead of Fed Chair Jerome Powell’s upcoming speech. He also pointed to market reaction following the President’s calls for Federal Reserve Governor Lisa Cook’s resignation. Adam Sarhan of 50 Park Investments called the pullback “perfectly normal,” adding that further weakness might prompt rotation into areas like biotech, healthcare, or small caps. Seth Hickle of Mindset Wealth Management described the move as a healthy reset after a strong run into earnings.
The report was compiled by Reuters journalists including Carolina Mandl, Johann Cherian, Laura Matthews, Suzanne McGee, and Gertrude Chavez-Dreyfuss.
