Traders work at the New York Stock Exchange on June 9, 2026.

NYSE

The S&P 500 and Nasdaq Composite dropped on Tuesday, even as oil prices pulled back, as a surge in chip stocks lost momentum after a one-day rally.

The broad market index fell 0.3%, while the Nasdaq Composite moved down 1%. The Dow Jones Industrial Average traded up 93 points, or 0.2%.

The iShares Semiconductor ETF shed more than 3% following a 6% rebound on Monday. The ETF had tumbled 10% on Friday for its worst day in six years as investors feared the AI-driven run in chips had risen too far, too fast. Micron Technology dropped almost 5% after Monday's 10% comeback. The shares tumbled about 20% in two days last week, including a 13% rout on Friday. Broadcom, which had an equally steep two-day drop last week, fell more than 2% as Monday's rebound fizzled.

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Markets had risen earlier as energy prices fell amid hopes for a lasting cessation of hostilities in the Middle East.

West Texas Intermediate crude futures lost 3% to trade under $90 a barrel at around $88 after U.S. Energy Secretary Chris Wright said that Strait of Hormuz ship traffic is "rising very meaningfully." The move also comes after President Donald Trump said that a deal between the U.S. and Iran could be reached in "two or three days" that reopens the Strait of Hormuz "immediately."

Though energy stocks on the S&P 500 fell 2%, the fall in oil had an otherwise positive impact. Materials and consumer discretionary led the large-cap index, which also got a boost from real estate after better-than-expected data on existing home sales. In contrast, information technology declined nearly 4%.

Jay Hatfield, CEO of Infrastructure Capital Advisors noted that investors are rotating out of secular growth stocks and into cyclical growth names such as Home Depot that could benefit from the reopening of the strait. On top of the fact that June also is typically "not a good month" for equities, Hatfield attributed some of the recent selling pressure to Space X's IPO later this week, saying that the event is likely an overhang on the market.

"I think everybody's a little nervous" Hatfield said to CNBC. "I think we're going to be choppy until we get that [Space X IPO] behind us."

OpenAI confidentially filed for an IPO late Monday, adding to enthusiasm around the AI trade. Space and AI play SpaceX is set to make its debut on Friday in what will be the largest IPO ever. The offering is seen by some as adding fuel to the AI-driven bull market, but some investors are wary that it could also mark a top in the trend with its $1.75 trillion valuation.