Dow gains 160 points as chip selloff drags Nasdaq ahead of earnings season

Dow Jones opened higher on Tuesday even as the Nasdaq came under pressure from another broad selloff in semiconductor stocks, highlighting a divergence in US equity markets ahead of the second-quarter earnings season.

The Dow Jones Industrial Average gained about 160 points, or 0.3%, while the Nasdaq Composite fell around 0.7%.

The S&P 500 slipped 0.25% as weakness in chipmakers weighed on the broader technology sector.

The mixed performance follows Monday's session, when the Dow briefly crossed the 53,000 mark for the first time and closed above the milestone, while the S&P 500 and Nasdaq Composite posted solid gains led by a rebound in semiconductor stocks.

Dow outperforms as chip stocks pressure Nasdaq

The Dow's relative strength contrasted with declines across major semiconductor names in trading.

Micron Technology fell about 6.9%, while KLA, Marvell Technology, Broadcom and Advanced Micro Devices also traded lower.

Nvidia lost more than 1.4% after a Reuters report said Chinese startup DeepSeek is developing its own artificial intelligence chip, a move that could reduce its reliance on chips from Nvidia and Samsung.

Memory stocks were among the biggest decliners.

Western Digital dropped more than 6%, while SanDisk also fell 8% as investors continued to take profits after the sector's strong rally over the past year.

Dow was supported by gains in software companies including Microsoft, Salesforce and IBM, helping the blue-chip index outperform despite broader weakness in technology hardware stocks.

Meanwhile, SpaceX was set to join the Nasdaq-100 on Tuesday, with its shares trading modestly higher ahead of the index inclusion after the industry's mandatory quiet period expired.

Samsung selloff weighs on global chip sector

The latest wave of selling began in Asia after South Korea's Kospi index dropped nearly 5%, driven by heavy losses in semiconductor companies.

Samsung Electronics fell nearly 7% despite reporting a 19-fold increase in second-quarter operating profit.

Investors appeared to focus instead on concerns about spending, demand and elevated expectations following the stock's strong rally.

SK Hynix also declined sharply, extending weakness across the memory-chip industry.

The company is scheduled to begin trading on the Nasdaq later this week, giving investors another closely watched event for the semiconductor sector.

The weakness spread into Europe, where the STOXX 600 index edged lower, before reaching US markets.

Analysts said the market reaction reflects heightened expectations heading into earnings season after semiconductor stocks led much of this year's rally.

Earnings and Fed remain in focus

Investors are now turning their attention to the second-quarter earnings season, which is expected to test whether artificial intelligence-related companies can justify their elevated valuations.

Market participants are also awaiting minutes from the Federal Reserve's latest policy meeting on Wednesday, the first under Chair Kevin Warsh.

According to LSEG data, traders currently expect at least one 25-basis-point interest rate increase before the end of the year.

Outside the technology sector, Fiserv rose after reports that the payments company had discussed selling its debit card payments infrastructure business to major US banks, including JPMorgan Chase and Bank of America.

Rivian shares fell more than 10% after the electric vehicle maker launched an offering of 75 million shares despite forecasting second-quarter revenue above analysts' estimates.

Oil prices also moved higher following reports of attacks on vessels near the Strait of Hormuz, adding another factor for investors to monitor as markets head into a busy week of earnings and monetary policy updates.