The Nasdaq Composite bore the brunt of the selloff, dropping 1.16% to 25,818.69, leaving the index down 4.7% from its June 2 peak. The contagion spread quickly to the PHLX Semiconductor Sector index, which slumped 4.65% as traders questioned whether the blistering growth in AI data center demand remains sustainable. Beyond chips, the broader market felt the pressure: Corning shares fell 4.8%, and Caterpillar shed 3.07%, despite the latter's recent AI-driven generator sales success.

Simultaneously, energy markets reacted to a volatile standoff near the Strait of Hormuz. West Texas Intermediate oil futures climbed 2.76% to $70.44 after the U.S. Treasury revoked Iranian oil purchase licenses following missile strikes on commercial vessels. This surge in energy costs rippled into fixed income, driving the 10-year Treasury yield to its sixth consecutive daily gain—the longest streak since October 2024. While J.D. Joyce of Joyce Wealth Management argued that current valuations remain supported by earnings, the market mood shifted toward caution as the U.S. Dollar Index climbed on renewed inflation anxiety.