The Nasdaq Composite bore the brunt of the selloff, shedding 1.16% to close at 25818.69, now down nearly 5% from its June record. The decline rippled through the sector, with the PHLX Semiconductor index dropping 4.65%. While companies like Corning and Caterpillar saw significant losses, skepticism is mounting regarding the sustainability of the rapid growth trajectory that has defined the AI trade. J.D. Joyce of Joyce Wealth Management noted that while success makes continued hyper-growth difficult, current earnings reports still provide a stronger fundamental foundation than the speculative volatility seen during the 2000 Dotcom crash.

Simultaneously, energy markets reacted to escalating violence near the Strait of Hormuz, where the Islamic Revolutionary Guard Corps targeted commercial vessels. West Texas Intermediate futures jumped 2.76% to $70.44 per barrel after the U.S. Treasury Department revoked licenses for Iranian oil purchases. This energy spike reignited inflation anxieties, pushing the 10-year Treasury yield to its sixth consecutive daily gain and strengthening the U.S. Dollar Index. Amid the broader market retreat, retail giant Walmart offered a rare bright spot, rising 0.8% after announcing price cuts on core consumer staples.