Dow falls 250 points as chip stocks slide, US-Iran tensions rise

US stocks opened lower on Wednesday as investors booked profits in semiconductor stocks following a record-breaking first half of 2026, while renewed US-Iran tensions and expectations of tighter monetary policy also weighed on sentiment.

The Dow Jones Industrial Average declined 253 points. The S&P 500 slipped 0.46% while the Nasdaq Composite fell 0.68%.

Semiconductor stocks lead declines

Chipmakers came under pressure in trading after posting outsized gains during the first six months of the year.

Micron Technology dropped 7.6%, although the stock remained up 238% year to date.

Sandisk fell 9% after surging more than 650% during the first half of 2026. Nvidia and Broadcom also declined about 3% and 2.2%, respectively.

The pullback follows a historic rally for the semiconductor sector.

The VanEck Semiconductor ETF (SMH) climbed 82% during the first six months of 2026, marking its strongest first-half performance since the fund launched in May 2000.

The broader market also posted solid gains over the same period.

The Dow Jones Industrial Average rose 8.9% for its best first half since 2021, while the S&P 500 gained 9.6% and the Nasdaq advanced 12.8%. The small-cap Russell 2000 jumped nearly 22%, its strongest first-half performance since 1991.

The semiconductor rally played a major role in driving market gains.

During the second quarter alone, gains in Micron, Intel and Advanced Micro Devices added a combined $2 trillion in market capitalization.

Nike fell 1.7% after the sportswear company said its turnaround efforts continued to face challenges in its latest earnings report.

Shutterstock tumbled nearly 28% after terminating its planned merger with Getty Images.

Investors weigh valuation concerns and Fed outlook

Despite the strong performance, some market participants warned that semiconductor stocks may have become stretched after their rapid gains.

Investors are also focused on Federal Reserve Chair Kevin Warsh, who is speaking at the European Central Bank Forum on Central Banking in Sintra, Portugal.

Since taking office in May, Warsh has launched a review of the Fed's policy framework and communications strategy.

Markets have increasingly priced in at least one interest rate hike before the end of the year as inflation concerns persist.

Recent economic data reinforced that outlook after US job openings climbed to a two-year high in May, suggesting a resilient labor market that could allow the central bank to remain focused on inflation.

Geopolitical tensions add to cautious mood

Investor sentiment was also pressured by renewed uncertainty surrounding the Middle East.

Fresh US-Iran tensions clouded hopes for a diplomatic breakthrough after Tehran said it would not meet with senior US envoys who traveled to the region following renewed hostilities.

Although a source familiar with the discussions and an Iranian official said technical talks were held in Doha, conflicting public statements suggested meaningful progress remained uncertain.

The developments renewed concerns over potential disruptions to global energy markets, contributing to the cautious tone across financial markets.

Beyond Warsh's remarks, investors will monitor US manufacturing data from the Institute for Supply Management later on Wednesday, followed by the June nonfarm payrolls report on Thursday for further clues on the strength of the US economy and the Federal Reserve's next policy moves.