Stocks finished lower on Tuesday, August 19, 2026, as a sharp selloff in chipmakers and AI infrastructure stocks dragged the broader market down. The S&P 500 ($SPX) closed down 0.69%, the Dow Jones Industrial Average ($DOWI) fell 0.22%, and the Nasdaq 100 ($IUXX) dropped 1.68%, sliding to a 1.5-week low. The declines pushed the S&P 500 and Dow to two-week lows.
Rising crude oil prices added to the pressure, stoking inflation concerns and sending global bond yields higher. WTI crude oil climbed to a three-week high after a vessel leaving the Strait of Hormuz was struck by an unknown projectile, and President Trump said he is not interested in extending the expired agreement with Iran, dimming prospects for a swift reopening of the strategic waterway.
Also read: Stocks Slip as Chipmaker Rout Deepens, Oil Surge Fans Inflation Worries
Chipmakers and AI Stocks Lead the Decline
The iShares Semiconductor ETF (SOXX) fell nearly 5% on Tuesday, with several major chipmakers posting steep losses. Sandisk (SNDK) and Seagate Technology (STX) each closed down more than 9%, while Marvell Technology (MRVL), Western Digital (WDC), and Micron Technology (MU) fell more than 7%. ARM Holdings (ARM) and Intel (INTC) dropped more than 6%, and KLA Corp (KLAC) lost over 5%.
Advanced Micro Devices (AMD), Lam Research (LRCX), and ASML Holding (ASML) all closed down more than 4%, while Applied Materials (AMAT), Broadcom (AVGO), Analog Devices (ADI), and Texas Instruments (TXN) fell more than 3%. The selloff in AI infrastructure names comes as investors reassess valuations after a strong run-up in the sector.
Also read: Boston Beer (SAM) Stays a Zacks #5 Strong Sell as Estimates Slide
Software stocks provided some support, with Intuit (INTU) rising more than 4% to lead Nasdaq 100 gainers, and Adobe (ADBE) gaining over 3%. Autodesk (ADSK), Atlassian (TEAM), and Salesforce (CRM) each rose more than 2%.
Oil Prices and Bond Yields Weigh on Sentiment
Crude oil prices pushed higher after the vessel incident near the Strait of Hormuz and comments from President Trump indicating no timeline for resolving the US-Iran conflict. Treasury Secretary Bessent said last week that the administration will soon announce exceptional economic measures against Iran, adding to the current US naval blockade of Iranian ports.
The rising oil prices fueled inflation concerns, pushing the 10-year Japan JGB yield to a 30-year high of 2.967%, the 10-year German Bund yield to a 15-year high of 3.272%, and the 10-year T-note yield to a 1.5-year high of 4.75%. However, stocks recovered from their worst levels after bond yields pulled back from their highs, with the 10-year T-note yield falling 2 basis points to 4.70%.
Economic Data Mixed, Earnings Strong
Tuesday’s economic data was mixed. July housing starts fell 12.4% month-over-month to 1.239 million, weaker than the expected 1.345 million. However, building permits rose 5.0% to a five-month high of 1.443 million, beating expectations. The July import price index ex-petroleum rose 0.3%, stronger than expected, while manufacturing production matched expectations with a 0.2% gain. Pending home sales fell 2.3%, weaker than the flat reading expected.
Despite the market decline, the earnings picture remains strong. The S&P 500 is tracking for earnings growth of nearly 32% in Q2, well above projections of 23%, according to Bloomberg Intelligence. AI spending is expected to account for most of the growth, with AI infrastructure stocks contributing nearly 60% of the S&P 500’s earnings-per-share growth. So far, 85% of the 456 companies that have reported have beaten estimates.
Markets are currently pricing in a 35% chance of a 25-basis-point rate hike at the Federal Reserve’s next FOMC meeting on September 15-16.
Overseas markets were mixed, with the Euro Stoxx 50 falling to a two-week low, while China’s Shanghai Composite climbed to a five-week high. Japan’s Nikkei-225 closed down sharply by 2.54%.
This article is for informational purposes only and does not constitute financial advice. Market conditions are volatile and past performance does not guarantee future results. Readers should conduct their own research before making investment decisions.
