Why Chip Stocks Are Shaking the Market — and What Comes Next
The Dow Jones Industrial Average rose 0.28% on Monday, August 24, 2026, while the S&P 500 fell 0.18% and the Nasdaq fell 0.38%, with technology stocks again pulling the index down. Reuters
A global stock market gauge from MSCI was also lower. Two things that normally help stocks — lower interest rates on government bonds and cheaper oil — were not enough to overcome the drag from technology companies. Reuters Think of it like a shopping mall where most stores are having a good day, but the biggest store is having a fire sale. No matter how well the others do, that one store drags down the whole mall's numbers.
The Dow did better than the Nasdaq because the Dow includes fewer technology companies. The Nasdaq is packed with tech and growth stocks, so when tech falls, the Nasdaq falls harder.
The selloff in chip stocks has been building in waves. On June 5, 2026, a global chip selloff erased more than $1 trillion in stock market value, hitting AI heavyweights including Nvidia. Reuters By late July, the Philadelphia Semiconductor Index, which tracks the largest chip companies, had fallen 2.2% in a single day and was sitting 21% below its record high from June 22, 2026. It was still up 63% for the year, though. Reuters
In that same late-July selloff, chip stocks shed about $1 trillion in value. Nvidia, SK Hynix, and TSMC each lost more than $100 billion. Nvidia alone lost $238 billion in a single day. CNBC
The selling has not been limited to semiconductors. On Tuesday, August 18, 2026, broader technology stocks sold off as bond yields rose, with the Dow falling 0.22%, the S&P 500 down 0.69%, and the Nasdaq dropping 1.33%. Reuters Stock futures were stable the next day, August 19, but that calm did not last. Reuters
Two events are now shaping what happens next. Markets are waiting for Nvidia's earnings report, which could drive the direction of the whole market. Reuters At the same time, geopolitical tensions are affecting prices. U.S. Bank reported that the Iran conflict and the Russia-Ukraine war continued to shape global markets through oil prices, shipping routes, trade policy, and inflation in 2026. U.S. Bank
Nvidia's report matters so much because investors see the company as a signal for how much businesses are spending on artificial intelligence. After losing $238 billion in one day in late July and seeing $1 trillion vanish from chip stocks overall, investors are split. Those who are optimistic point out that chip stocks are still up 63% for the year. Those who are worried point to the 21% drop from the June high and the fact that two separate trillion-dollar selloffs have hit the sector in under three months.
The broader context here is what the rest of the market tells us. Falling government bond yields and declining oil prices on August 24 would normally give tech stocks a boost. The fact that they didn't suggests the selloff in chip and AI stocks is about something specific to those companies' earnings and valuations — not a general panic hitting all stocks. The Dow's positive close, thanks to its lower exposure to tech, supports that read.
What remains unresolved is whether Nvidia's results can stop the slide or accelerate it. Nvidia has been the biggest driver of both the AI rally and its pullback. With chip stocks already in a correction — a drop of 10% or more from a recent peak — and two big events, Nvidia's earnings and Iran sanctions, arriving around the same time, rough trading in chip stocks is the expectation, not the exception.
