Wall Street closes lower as Micron, SanDisk tumble more than 10% amid semiconductor profit-taking

Wall Street closed lower Tuesday as shares of memory chipmakers Micron Technology and SanDisk each plunged more than 10 percent, with investors locking in profits on AI-related semiconductor stocks that had posted outsized gains.

The Dow Jones Industrial Average fell 13.96 points, or 0.03 percent, to close at 52,305.24.

The S&P 500 dropped 16.13 points, or 0.22 percent, to 7,483.23, while the tech-heavy Nasdaq Composite slid 173.69 points, or 0.66 percent, to 26,040.03.

Micron Technology tumbled 10.57 percent on the day, and SanDisk fell 10.62 percent.

AMD dropped 6.89 percent and Intel shed 9.03 percent. Nvidia, the bellwether AI chip stock, also declined 1.25 percent.

The selling came on the first trading day of the third quarter, after Wall Street closed out a strong second quarter the previous day. Analysts attributed the broad chip-sector weakness to profit-taking concentrated in AI-related semiconductor names that had rallied sharply in recent months.

Samsung Electronics and SK hynix had already fallen 5.84 percent and 3.40 percent, respectively, on the domestic market Monday, and attention is now turning to how Tuesday's declines in Micron and other US chipmakers will affect the two Korean companies' share prices.

The rest of the "Magnificent 7" — excluding Nvidia — held their ground, helping to cushion the broader index declines.

Meta surged 8.81 percent after reports that the company is exploring a cloud services business model built on its own data center infrastructure.

Meta has built a vast computing infrastructure in pursuit of artificial superintelligence (ASI) and is reportedly looking to sell excess capacity to outside customers.

Should Meta enter the cloud market, it would represent a major shake-up of an industry currently dominated by Amazon Web Services, Microsoft Azure and Google Cloud.

Meta projects its capital expenditure this year — the bulk of which is directed toward AI infrastructure — will reach $145 billion (about 225 trillion won).

Other "Magnificent 7" members also gained: Apple rose 1.73 percent, Microsoft 3.02 percent, Amazon 1.41 percent, Alphabet 1.07 percent and Tesla 1.12 percent.

Markets are also watching the outlook for US monetary policy. Federal Reserve Chair Kevin Warsh said recently that inflation risks in the United States have eased and that inflation expectations have come down — a signal that runs counter to market expectations that the Fed could raise its benchmark interest rate later this year. Warsh, however, cautioned against prejudging the path of monetary policy.

Speaking as a panelist at a central bank forum hosted by the European Central Bank in Sintra, Portugal, on Tuesday, Warsh said inflation expectations had fallen over the past four weeks and that inflation risks had also declined.

He nonetheless reiterated his intention to scrap "forward guidance," warning against making premature assumptions about the direction of monetary policy.