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US stocks lost ground on Tuesday as a market rotation out of chip stocks resumed and the AI trade lost steam.

The S&P 500 (^GSPC) fell 1.1%, while the tech-heavy Nasdaq Composite (^IXIC) dropped by nearly 2% after tech stocks lifted markets to a modest rebound on Monday. The Dow Jones Industrial Average (^DJI) declined 0.6%.

Chipmaker stocks, including Micron Technology (MU), Nvidia (NVDA), and Broadcom (AVGO), turned lower, shedding earlier gains as they looked to build on their rebound. The action highlighted the ongoing tug-of-war between AI optimism and growing concerns that persistent inflation could prompt the Federal Reserve to raise rates this year.

Meanwhile, one of the primary drivers of rising prices — the war with Iran — shows no signs of ending, though President Trump said peace talks are on track after Iran and Israel agreed to end recent tit-for-tat attacks.

OpenAI said after Monday's market close that it had confidentially filed paperwork for an initial public offering, a week after rival Anthropic took the same step. Both AI companies are now positioned to trade on Wall Street as soon as this fall.

Wall Street is gearing up for a major event on Friday, when SpaceX (SPCX) could make its market debut and set a record for the largest public offering in history.

The World Cup could skew the next few months of labor market data as hiring in host cities gets a boost, according to Goldman Sachs, adding a wrinkle to data that has become critical for investors evaluating the likelihood of the first rate hike from the Federal Reserve since July 2023.

During the 1994 World Cup — the last hosted by the US — payroll employment rose 80,000 jobs above trend in host cities, with bumps of roughly 40,000 jobs above trends seen during summer Olympics hosted in US cities, Goldman Sachs economists Pierfrancesco Mei and David Mericle said in a client note.

Scaling to the expected size of this year's World Cup in June and July, the economists estimate a boost of 40,000 jobs in June and 10,000 in July. However, the boost is likely to be short-lived, Mei and Mericle said, with an expected revision downward of 15,000 of those jobs in August.

Even if the skew is short-lived, the economists wrote, it will be important for traders looking for an actual read on the state of the labor market.

"The effects of major sporting events tend to be short-lived, reversing in the months following the event," the economists wrote. "Even so, having a sense of the magnitude of their impact will be useful for distinguishing temporary World Cup effects from changes in underlying economic trends in coming months."

It’s been a choppy morning on Wall Street.

The Dow Jones Industrial Average fell 0.3%, while the S&P 500 and Nasdaq Composite fell by 0.8% and 1.5%, respectively, after all three indexes opened in the green.

Technology and energy stocks weighed on markets in the late morning, while financials, healthcare, and real estate names provided support.

The move comes as investors may be looking to take some profits in the semiconductor names that have led the market to all-time highs in recent weeks.

Yahoo Finance’s Claire Boston reports:

Home sales ticked up in May, the latest sign that buyers and sellers are staying active in the market despite higher mortgage rates and glum economic sentiment.

Existing home sales in May jumped 3.2% from a year ago to a seasonally adjusted annual rate of 4.17 million, according to National Association of Realtors data released on Tuesday. On a month-over-month basis, home sales were also up 3.2%.

May's figures are one of the best showings for home sales in the last three years. During that time, the housing market has been in a deep freeze brought on by rising mortgage rates and high prices.

"I cannot definitively say if home sales are truly coming out of a slump, because we know there's still uncertainty" around oil prices and mortgage rates, said Lawrence Yun, the NAR's chief economist.

Read more here.

Stocks opened higher on Tuesday, adding to a tech-led recovery that started the week.

The S&P 500 (^GSPC) rose 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) led gains, rising 0.7%. The Dow Jones Industrial Average (^DJI) added 0.6%.

Oil prices retreated after Israel and Iran paused hostilities and President Trump expressed confidence that a peace deal could soon be finalized. But Trump also cautioned that a reignition of bombing could close the Strait of Hormuz “for months.”

Brent crude futures (BZ=F), the international benchmark, fell 2% to $92 a barrel. West Texas Intermediate futures (CL=F), dropped 2.6% to $88 a barrel.

Here’s a look at some top trending stocks on Yahoo Finance on Tuesday morning:

Applied Digital (APLD): The data center designer announced a $1.59 billion offering of senior notes and said it signed a $5.2 billion lease with an unnamed “high investment-grade hyperscaler,” giving greater visibility to $36 billion in lease revenue across its campuses. The stock jumped over 12%.

Vail Resorts (MTN): After a low-snow winter season, the ski resort group cut its full-year net income guidance and said that North American ski pass sales for the upcoming 2026/2027 season were down. The stock was little changed in premarket trading.

The J.M. Smucker Company (SJM): Shares of the Uncrustables maker rose 4% after the company reported revenue in line with expectations and earnings per share that were slightly higher than estimates. Its full-year guidance was also slightly higher than expectations at the midpoint.

Apple (AAPL) continued to steadily lose ground after the iPhone maker announced a series of updates at its annual developers conference, which marked Tim Cook’s final one of these events as CEO.

Yahoo Finance's Dan Howley reports on how Apple rebooted its AI strategy:

Apple on Monday debuted a next-generation version of its Siri personal assistant that seeks to pull the long-neglected digital helper into the AI era as part of the company's Worldwide Developer Conference.

The new Siri, called Siri AI, and enhancements to the company's Apple Intelligence platform are the centerpieces of Apple's effort to reset its AI strategy, after a series of delays led to criticism from investors and users alike.

Apple's pitch: AI that's both personal and private. During the company's keynote, senior vice president of software engineering Craig Federighi framed Apple's offerings as more purposeful than those from competing firms that add AI to their products for the sake of it.

The approach is meant to differentiate Apple's AI from the likes of OpenAI's (OPAI.PVT) ChatGPT or Anthropic's (ANTH.PVT) Claude by focusing on mainstream rather than AI power users.

Read more here.

Bloomberg reports:

CoreWeave’s (CRWV) stock price has more than doubled since the AI data center operator's March 2025 initial public offering. Over the same period, the company's executives have unloaded more than $2.3 billion worth of their own holdings.

Three of the company's billionaire co-founders — Michael Intrator, Brannin McBee and Brian Venturo — were behind the bulk of those sales, according to data compiled by Washington Service, which tracks insider buying and selling at US-listed companies.

Venturo, CoreWeave's chief strategy officer, has sold over $1.1 billion worth of shares since the company's lockup period expired in August, opening the gates for executives to trade their own holdings. That makes him the second-largest insider seller by value sold so far this year, Washington Service data shows, with Intrator in seventh place.

Read more here.

A leveraged exchange-traded fund tracking SK Hynix (000660.KS) deviated sharply from the underlying stock's move for a second day, underscoring the risk of investing in such products that have attracted strong retail interest.

Bloomberg reports:

The KIM ACE SK Hynix Single Stock Leverage ETF, designed to deliver twice the chipmaker's daily return, plunged 27% on Tuesday even as SK Hynix jumped 16%. The divergence followed Monday's dislocation, when the ETF soared 50% despite the stock falling nearly 8%.

The back-to-back wrong-way moves have intensified scrutiny of the ETF manager Korea Investment Management Co., which said yesterday's anomaly for the $37 million product stemmed from a lack of liquidity. On Tuesday, the Korea Exchange identified three funds, including KIM ACE, as potential candidates for an investment warning due to a divergence in their net asset value and market prices.

… But the rapid growth of such ETFs is also raising questions about structural vulnerabilities.

Read more here.

From Bloomberg:

The $31 trillion Treasury market has an unequivocal message for Kevin Warsh's Federal Reserve: Interest rates aren't high enough.

Yields on policy-sensitive US two-year notes have surged to their highest level in more than a year after a trove of economic data led traders to price in at least one quarter-point rate hike as soon as October. At around 4.15%, the two-year yield trades well above the Fed's current policy band of 3.5% to 3.75%, a divergence that began in March.

The reset upwards only intensified last week after the latest read on job growth topped all forecasts, reinforcing a growing conviction that rates need to rise in order to rein in inflation pressures and temper the risk of an AI-induced boom overheating the economy. Reports due later this week on consumer and wholesale prices in May are expected to provide further validation of the narrative.

"Show me where rates are being restrictive," said Jack McIntyre, portfolio manager at Brandywine Global Investment Management. "Treasury yields are going to be biased higher until something breaks."

Read more here.

Bloomberg reports:

Oil declined after Israel and Iran agreed to end attacks against each other following an escalation of violence that threatened to derail efforts to end the war in the Middle East.

Brent (BZ=F) crude slipped toward $93 a barrel after closing slightly higher on Monday, while West Texas Intermediate (CL=F) was around $90. Israeli Prime Minister Benjamin Netanyahu said the country is holding fire against Iran for now, but will respond should Tehran attack again. Iranian media conveyed similar sentiment.

The flare-up in hostilities put wider negotiations to end the war in the Middle East at risk, prompting President Donald Trump to appeal for de-escalation. A fragile ceasefire remains in place, but the Strait of Hormuz is still effectively closed by a double blockade maintained by Tehran and Washington, choking off supplies of crude, fuels and natural gas to global customers.

Reflecting remaining risk in the region, an unladen oil tanker in the Gulf of Oman was disabled by US forces on Monday after it "violated" the blockade by attempting to sail to an Iranian port, US Central Command said on X. Israel's military also intercepted a "suspicious aerial target" from Yemen.

Read more here.

Reuters reports:

Asian stock markets eked out a rally on Tuesday and oil prices came off highs after Israel and Iran said they would halt attacks on each other for now, while ever-hopeful investors bought the ‌latest dip in semiconductor stocks.

South Korea's Kospi (^KS11) climbed 3.4%, having sunk ‌more than 8% on Monday after a run ⁠of spectacular gains left valuations stretched and retail investors with extended margin positions.

Japan's Nikkei (^N225) firmed 0.9%, after losing 3.9% the previous session, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.5%.

Chinese blue chips added 0.4% as ⁠trade data showed exports rose 19.4% in May and imports climbed 27.4%, with both beating median forecasts. The strength shows China's success in finding new markets in the face of U.S. tariffs and other trade hurdles, even as domestic demand struggles.

Read more here

Bloomberg reports:

SpaceX's initial public offering is well oversubscribed with multiple institutional investors placing orders for about $10 billion or more of shares, according to people familiar with the matter, as demand builds for a potentially record-setting debut.

Banks leading the offering by Elon Musk's rocket, satellite and artificial intelligence company are expected to stop taking orders from institutional investors on Wednesday after the market closes in New York at 4 p.m., some of the people said, asking not to be identified as the information isn't public.

Closing the order books gives banks time to gauge demand ahead of the listing and advise the company on pricing. SpaceX's IPO is set to price June 11 and trade the following day. The company is offering 555.6 million shares at a fixed price of $135 each, which would raise about $75 billion, and value it at about $1.8 trillion.

Retail investors can still submit orders for SpaceX shares on some platforms beyond the Wednesday deadline. The company is allocating as much as 30% of the offering to retail, Bloomberg News has reported.

On Tuesday, Morgan Stanley is hosting about 300 institutional investors at the bank's New York headquarters for meetings with SpaceX management including President Gwynne Shotwell and Chief Financial Officer Bret Johnsen, a person familiar with the plans said. The event will be hosted by the bank's co-president Dan Simkowitz, said the person, who asked not to be named discussing private meetings.

Read more here.