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Chip Stock Rally Stalls After Asian Tech Sell-Off
A rally in U.S. semiconductor stocks showed signs of stalling Tuesday after a strong close on Monday. The reversal in momentum followed a significant sell-off in Asian markets, where shares of major chipmakers fell despite positive earnings news. South Korea's KOSPI index, which is heavily weighted with tech stocks, dropped by approximately 5%.
Memory chip manufacturer Samsung Electronics saw its shares decline by nearly 7% on Tuesday, even after the company announced a 19-fold increase in its second-quarter operating profit. Shares of its rival, SK Hynix, also slid. The market reaction suggests that investors may believe the substantial gains from the artificial intelligence chip frenzy are already reflected in current stock prices, with Samsung's stock having more than doubled and SK Hynix's more than tripled year-to-date.
The downturn in Asia contrasted with Monday's performance in the U.S., where the S&P 500 and Nasdaq closed higher. That rally was reportedly fueled by news that Broadcom would be extending its agreement to supply Apple with custom chips through 2031. However, Nasdaq futures were down more than 1% before Tuesday's opening bell.
AdIn other market news, oil prices climbed, with Brent crude trading near $73 per barrel, following reports that Iran had fired missiles at commercial ships in the Strait of Hormuz. In foreign exchange, the Japanese yen remained near 40-year lows against the dollar, with traders monitoring for potential government intervention. Meanwhile, a NATO summit began in Ankara, Turkey, with European defense spending expected to be a primary focus.