Semiconductor Stocks Slump on Tariff Fears, Rising Bond Yields
Chipmakers like NVIDIA face headwinds as weak manufacturing data and pressure from the bond market weigh on the tech-heavy sector.
The semiconductor sector faced a broad sell-off Tuesday, as a confluence of macroeconomic pressures sent investors fleeing from growth-oriented technology stocks. Key chipmakers saw significant declines, with industry leader NVIDIA (NVDA) falling 3.36%, reflecting growing anxiety over tariff uncertainty and rising interest rates.
The downturn was largely fueled by , where the 10-year Treasury yield climbed to 4.27%. Higher yields on government bonds typically make high-growth sectors like semiconductors less attractive to investors, who can find safer returns elsewhere. This shift contributed to the S&P 500 having its worst day in a month, with Big Tech companies leading the retreat.
Adding to the market's concerns was a recent federal appeals court ruling that President Trump overstepped his authority in announcing sweeping tariffs. While the tariffs remain for now, the decision introduces fresh uncertainty into global supply chains, a critical component for the highly globalized semiconductor industry. The further spooked the market, with a report from the Institute for Supply Management showing U.S. manufacturing shrank more than expected last month.
One company surveyed for the report noted that 'too much uncertainty for us and our customers regarding tariffs and the U.S./global economy' has weakened orders. This sentiment encapsulates the challenge for chipmakers, who now face a difficult environment of geopolitical tensions, unfavorable interest rate conditions, and signs of a slowing economy, pointing to potential further downside for the sector.