Wall Street closed lower on Thursday as a sharp semiconductor selloff pulled the Nasdaq and S&P 500 to their weakest levels in more than a week.
Investors questioned whether the scale of debt-funded artificial intelligence spending can continue supporting chip demand while expectations for additional Federal Reserve rate increases place more pressure on expensive technology stocks.
What Moved
Thursday, June 25
The Dow fell 0.09%.
The S&P 500 dropped 1.44%.
The Nasdaq declined 2.21%.
The Philadelphia Semiconductor Index plunged 7.9%.
The S&P 500 technology sector fell 3.7%.
Nvidia lost 4.1%.
Intel, Marvell, and AMD declined between 5.8% and 9.4%.
Micron and SanDisk each fell about 13%.
The Cboe Volatility Index climbed to 19.52, its highest level in more than a week.
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Why It Moved
The main pressure came from growing concern about the amount of capital flowing into artificial intelligence infrastructure.
Major technology companies have committed heavily to data centers, chips, and computing capacity. Some of that expansion is being financed through debt, raising questions about how quickly AI revenue can grow enough to justify the spending.
SpaceX recently joined the group of large technology companies using the bond market to raise capital. Its shares rose 1 percent on Tuesday after three straight sessions of declines, but broader concern about debt-funded AI investment continued weighing on the sector.
Semiconductors absorbed the largest losses because they have been among the strongest beneficiaries of the AI buildout. Nvidia declined, while Intel, Marvell, AMD, Micron, and SanDisk fell more sharply.
Micron’s upcoming earnings report became an immediate test for the group. The company has been one of the S&P 500’s strongest performers this year, making its outlook relevant to expectations for memory demand and AI infrastructure spending across the sector.
Federal Reserve expectations added another layer of pressure. Traders increasingly priced the possibility of two rate increases by December, compared with expectations for one quarter-point increase two weeks earlier.
Higher rates reduce the current value investors place on future earnings. That makes highly valued growth and technology stocks especially sensitive when monetary policy expectations become more restrictive.
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Why It Matters Now
Several short-term signals emerged:
Semiconductor leadership is weakening under AI spending concerns.
Debt-funded technology expansion is becoming a broader market risk.
Micron’s earnings may shape the next move across memory and chip stocks.
Markets are preparing for a more restrictive Federal Reserve path.
Technology selling has not yet become a full-market retreat.
Volatility is rising as investors reassess concentrated AI exposure.
Six of the S&P 500’s 11 sectors still finished higher, led by a 1.8% gain in consumer staples. That suggests investors were rotating toward more defensive areas rather than leaving equities entirely.
Thursday’s Personal Consumption Expenditures report will be the next major policy signal. A stronger inflation reading could reinforce expectations for two rate increases and extend pressure on technology valuations.
In the immediate window ahead, market direction will depend on whether Micron can restore confidence in AI-related chip demand and whether inflation data changes the expected Fed path. Weak guidance or persistent inflation could deepen the semiconductor pullback. Strong results and a softer price report could help stabilize the sector after Tuesday’s rout.
