S&P 500 and Nasdaq Slip as Tech Stocks Weigh on Markets

NEW YORK — The S&P 500 and Nasdaq fall Monday as investors pulled back from some of the market’s biggest technology names while monitoring developments in U.S.-Iran negotiations and upcoming inflation data.

The Dow Jones Industrial Average managed modest gains, highlighting a growing divide between technology stocks and other sectors that have recently begun attracting investor interest.

At midday trading, the Dow rose 205 points, or 0.4%, while the S&P 500 slipped 0.2% and the Nasdaq Composite dropped 0.9%.

Megacap Technology Stocks Lead Market Declines

Wall Street’s recent rally has been fueled largely by artificial intelligence optimism. However, investors are increasingly questioning whether the largest technology companies can justify the enormous spending required to support AI infrastructure expansion.

Alphabet led the declines, tumbling 6.1%, while several other technology giants also moved sharply lower:

• Meta fell 4.3%
• Amazon lost 3.4%
• Microsoft dropped 2.3%

The weakness pushed the S&P 500 communication services sector down 4.4%, making it one of the market’s poorest performers.

Analysts note that companies financing massive AI investments have lagged behind businesses directly benefiting from that spending.

“There’s a distinguishing aspect in this market between those who are receiving the checks and those who are writing the checks,” said David Wagner, head of equity and portfolio manager at Aptus Capital Advisors.

SpaceX Extends Post-IPO Pullback

SpaceX continued its recent decline, falling nearly 10% and marking a third consecutive session of losses.

The Elon Musk-led company also announced its first debt offering and disclosed approximately $100.8 billion in cash and cash equivalents as of June 19.

Despite the recent weakness, SpaceX remains one of the most closely watched stocks following its high-profile public market debut.

Software companies also faced pressure, with the sector falling to its lowest level in more than two months.

Among the notable decliners:

• ServiceNow lost 4.1%
• Atlassian fell 3.5%
• Intuit dropped 2.3%

Semiconductor Stocks Continue to Shine

While software and megacap technology names struggled, semiconductor stocks remained a bright spot.

The Philadelphia Semiconductor Index climbed 1% to a new record high as investors continued to favor companies directly benefiting from AI-related demand.

Micron Technology rose 4%, while Sandisk gained 5.4%.

Micron’s earnings report, scheduled for Wednesday, is expected to be one of the week’s most important events for investors. The memory-chip maker’s stock has surged nearly 300% this year amid strong demand for AI infrastructure.

Broader Market Shows Signs of Strength

Although technology stocks weakened, the broader market remained relatively resilient.

Eight of the eleven major S&P 500 sectors traded higher, suggesting investor interest may be expanding beyond the technology sector.

Financial stocks rose 0.7%, while industrial companies also gained 0.7%.

This broader participation is viewed by many analysts as a healthy sign for the overall market.

Oil Prices Fall on Progress in US-Iran Talks

Investors also closely followed developments in diplomatic talks between the United States and Iran.

Oil prices dropped as much as 2% after officials from both countries reported encouraging progress during negotiations in Switzerland.

The discussions produced a framework aimed at reaching a final agreement within 60 days, helping ease concerns about supply disruptions in the Persian Gulf.

Lower energy prices have supported market sentiment because they may reduce inflation pressures and ease risks to economic growth.

Inflation Data and Federal Reserve Remain Key Focus

The next major catalyst for markets arrives Thursday with the release of the Personal Consumption Expenditures (PCE) report, the Federal Reserve’s preferred inflation measure.

A stronger-than-expected reading could reinforce expectations that policymakers will maintain a restrictive stance on interest rates.

Federal Reserve Chair Kevin Warsh recently emphasized the need to continue fighting inflation, prompting investors to reassess the likelihood of additional rate hikes.

Markets currently anticipate:

• One 25-basis-point rate increase in September.
• Elevated interest rates through the remainder of the year.
• Continued caution from Federal Reserve officials.

Investors will also monitor comments from New York Fed President John Williams and Chicago Fed President Austan Goolsbee for additional policy signals.

Healthcare Stocks Gain on Major Acquisition

Among individual stock movers, Apogee Therapeutics surged nearly 47% after AbbVie announced plans to acquire the biotech company for approximately $10.9 billion in cash.

AbbVie shares gained 6.7%, helping lift the healthcare sector by 1%.

The acquisition strengthens AbbVie’s pipeline in dermatology, respiratory conditions and immune-related diseases.

Market Outlook

The S&P 500 and Nasdaq fall comes as investors rotate away from some of the market’s most expensive technology stocks while seeking opportunities in semiconductors, healthcare, industrials and financials.

With U.S.-Iran negotiations progressing, oil prices retreating and critical inflation data approaching, markets appear poised for another week of heightened volatility as traders assess the path of interest rates and economic growth.