US Stocks: S&P 500, Nasdaq Fall As Tech Selling Resumes

The S&P 500 and Nasdaq indexes fell on Tuesday as a rebound in ‌technology shares faded and as President Donald Trump said the U.S. must react to Iran's shooting down of a U.S. helicopter. Trump wrote in a social media post that Iran had shot ​down the U.S. Apache helicopter that was patrolling the Strait of Hormuz overnight, and vowed to respond, which added to doubts about prospects for a truce in the Middle East war.

The Cboe Volatility ​Index ​hit its highest level since April 7 during the session as stocks sold off.

Technology stocks resumed Friday's selloff following a bounce on Monday. The S&P 500 tech index fell more than 4% before paring losses. 

The Philadelphia SE Semiconductor Index dropped as much as 8.6% after rising 3% in early trading. The ⁠tech index ended down 1.8% and the semiconductor index was 1.9% lower on the day.

"When the bounce ran its course this morning, the tape came for sale more broadly. There's also a rotation going on ... so part of it is more of a momentum unwind," said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

Trump's post also briefly "created another leg down," O'Rourke said.

Iran and Israel on Monday said they would stop attacking each other, boosting hopes that war tensions were easing.

The blue-chip Dow ended higher, while ​the Russell 1000 value index gained ‌0.4%, outperforming the Russell ⁠1000 growth index, which fell 0.7%. Investors ⁠may also be worried ahead of inflation data and a highly anticipated SpaceX IPO later this week.

The Dow Jones Industrial Average rose 86.10 points, or 0.17%, to 50,872.11, the S&P ​500 lost 19.08 points, or 0.26%, to 7,386.65 and the Nasdaq Composite lost 250.84 points, or 0.97%, to 25,678.82. Consumer price data ‌for May could offer fresh clues on how the rise in energy prices, driven by the Iran ⁠war, is impacting inflation. The data is due on Wednesday.

A stronger-than-expected jobs report on Friday increased bets that the Federal Reserve will hike interest rates this year. SpaceX's market debut on Friday could also be a hurdle for U.S. stocks as investors worry about possible overexuberance among high-growth technology stocks. Elon Musk's SpaceX is aiming to raise $75 billion and targeting a valuation of $1.75 trillion, the most ever for an IPO.

"This IPO is massive," said Jed Ellerbroek, portfolio manager at Argent Capital Management. "Every investment management firm in the country is talking about and considering SpaceX. Even if they've decided not to buy it, they're reading the news, they're seeing the new contract announcements ... Elon Musk talk is everywhere. You can't avoid it."

"We all know Friday's trading day is going to be crazy. There's going to be big volatility," he added.

Technology and AI-linked stocks sold off sharply on Friday after Broadcom's disappointing forecast fueled concerns about high valuations in the sector, particularly in chipmakers, which have rallied sharply this year. ‌The semiconductor index remains up 78.7% for the year so far.

Shares of Broadcom were down 1.1% on ⁠Tuesday, while Nvidia was down just 0.2%. Shares of Ciena fell 5.9% after the company announced pricing on a convertible ​debt offering.

Advancing issues outnumbered decliners by a 1.33-to-1 ratio on the New York Stock Exchange. There were 208 new highs and 190 new lows on the NYSE.

On the Nasdaq, 2,494 stocks rose and 2,378 fell as advancing issues outnumbered decliners by a 1.05-to-1 ratio. The S&P 500 posted 31 new 52-week highs and 8 new lows while the Nasdaq Composite recorded ​151 new highs and ‌181 new lows.

Volume on U.S. exchanges was 24.77 billion shares, compared with the roughly 20 billion average for the full ⁠session over the last 20 trading days.