Technology stocks drag Nasdaq lower; Dow, small caps edge up

It was a mixed session for U.S. stock indexes, with the Dow Jones Industrial Average and the Russell 2000 posting slight gains at the close.

The S&P 500, the Nasdaq Composite and the Nasdaq 100 each opened in negative territory, attempted a midday recovery, then dropped sharply in the afternoon after traders reacted to reports of weaker-than-expected revenue at OpenAI. Buyers got a chance during the rebound, but by the afternoon sellers had regained control.

A decline in Treasury yields offered no support. The market focused on a possible vulnerability in the artificial-intelligence growth narrative, as selling spread across semiconductor makers, AI infrastructure firms and other technology stocks.

Closing levels for major U.S. indexes

• Dow Industrial Average: +52.01 points, or +0.10%, at 51,237.13.

• S&P 500: −36.30 points, or −0.47%, at 7,765.47.

• Nasdaq Composite: −345.35 points, or −1.25%, at 27,193.34.

• Russell 2000: +0.93 points, or +0.03%, at 2,794.13.

• Nasdaq 100: −434.27 points, or −1.39%, at 30,725.81.

The divergence between the indexes is notable. The Dow and small-cap stocks held their ground, while the technology-focused benchmarks took the heavier losses. The S&P 500 also ended lower, though its decline was more modest.

AI and chip stocks suffer steep drops

The list of AI, semiconductor and related infrastructure stocks that fell by 4% or more included:

• Coherent (COHR): −9.63%.

• Astera Labs (ALAB): −9.21%.

• CoreWeave (CRWV): −7.77%.

• Nebius (NBIS): −7.35%.

• Arm (ARM): −6.48%.

• Bloom Energy (BE): −6.34%.

• Lumentum (LITE): −5.62%.

• Intel (INTC): −5.34%.

• SanDisk (SNDK): −4.90%.

• Micron (MU): −4.79%.

• Broadcom (AVGO): −4.35%.

• SK hynix: −4.35%.

Those percentage declines were much steeper than the broader market's losses. The sell-off was not confined to a single chipmaker but hit multiple corners of the AI investment theme.

Apple stands out among Magnificent Seven decliners

Apple was the only Magnificent Seven stock to close higher:

• Apple: +1.12%.

• Meta: −0.06%.

• Alphabet: −0.63%.

• Tesla: −0.74%.

• Microsoft: −1.35%.

• Amazon: −2.25%.

• Nvidia: −2.94%.

Nvidia led the decreases within that group, though its loss was less severe than those of many names on the AI and chip decliners list.

Lower Treasury yields fail to lift stocks

Treasury yields moved lower, with the larger declines at the long end of the curve. A late-day snapshot showed:

• 2-year: 4.7514%, down 1.26 basis points.

• 5-year: 4.9871%, down 3.39 basis points.

• 10-year: 5.2268%, down 5.02 basis points.

• 30-year: 5.5840%, down 5.86 basis points.

Lower yields can often support valuations of growth stocks. On this day, that support was overwhelmed by anxiety over the revenue outlook behind the AI investment narrative.

That matters for traders. A normally positive development appeared, yet the technology indexes still fell sharply.

The lesson for traders: watch the price action

A favorable backdrop is only useful if buyers respond to it.

On this day, yields dropped and stocks attempted a recovery around midday. But the bounce did not last. For newer traders, this illustrates that lower yields do not automatically translate into higher technology stocks.

Watch the price. Buyers need to reclaim a clear technical level and hold it before a recovery gains more credibility. Until then, a bounce may simply be a correction within the downtrend.

Related analysis

Heavy selling hits US stock markets on OpenAI revenue weakness