NASDAQ Leads Stocks Lower as Chip Stocks Tumble; Fed Inflation Outlook Weighs

Market Overview

The NASDAQ Composite Index led U.S. equities lower on Monday, closing down 1.55% at 25,873.18, as technology and semiconductor stocks faced heavy selling pressure. The Dow Jones Industrial Average fell 0.26% to 52,504.26, while the S&P 500 dropped 0.79% to 7,515.42. The Russell 2000 shed 0.83%, reflecting broad-based risk aversion.

Semiconductor Sector Under Pressure

Chip-related stocks dominated the decliners, with Applovin down 12.65%, Micron -4.40%, Marvel Technologies -7.75%, Intel -6.12%, Broadcom -3.98%, AMD -4.21%, Texas Instruments -4.14%, SanDisk -12.63%, ARM Holdings -7.55%, Nebius Group -4.16%, Lam Research -5.83%, GE Vernova -4.49%, Applied Materials -4.50%, Nvidia -3.52%, SpaceX -4.24%, Cerebra -4.86%, and SK Hynix -9.32%. The sell-off followed a 8.95% plunge in South Korea's KOSPI, signaling global risk-off sentiment.

Geopolitical and Fed Factors

The downturn accelerated after President Donald Trump announced plans to impose a 20% toll on ships transiting the Strait of Hormuz, citing compensation for U.S. naval protection. The move raised concerns over global trade disruptions and energy supply risks. Meanwhile, Fed Governor Christopher Waller signaled that another rise in core inflation could justify further rate hikes, while emphasizing that sustained soft inflation data would be needed to shift toward a dovish stance.

Implications for Traders

The combination of geopolitical uncertainty and hawkish Fed rhetoric pressured risk assets, including the NASDAQ. Forex traders may monitor the U.S. dollar's strength against major pairs, particularly USD/JPY and EUR/USD, as safe-haven flows intensify. The upcoming June CPI report and Fed Chair Kevin Warsh's congressional testimony on Tuesday could further sway rate expectations and equity volatility.

Technical Context

The NASDAQ's decline pushed it below key technical levels, with the 200-day moving average acting as a critical support zone. A break below this level could signal deeper downside momentum for tech stocks.

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