Tech Leads Stock Market Sell-Off as Jitters Flare Up on Wall Street

Markets were on edge as this year’s software stock slump picked up steam. 

The tech-heavy Nasdaq dropped 1.4% Tuesday, weighed down by sinking tech stocks. The benchmark S&P 500 pared losses to close down about 0.8%, and the blue-chip Dow Jones Industrial Average, which this morning hit a record high, slid 0.3%. (Read Investopedia's live markets coverage here.)

The Cboe Volatility Index, often called the “Fear Index,” surged above 20, a reading that generally indicates mounting unease—though not panic—on Wall Street. Gold, the classic safe haven asset, was recently up more than 6%. 

The major indexes came into Tuesday’s session riding high. The S&P 500 closed a fraction of a percentage point off a record high on Monday, and opened in the green on Tuesday after strong quarterly results from AI darling Palantir (PLTR). But it didn’t take long for the morning’s optimism to fade: The S&P and Nasdaq were both down on the day within a half hour of the open. 

After last year's barrage of unsettling headlines out of Washington, D.C., investors came into 2026 expecting volatility. They got plenty of it last month with President Donald Trump's threats against Federal Reserve independence and some of America's key alliances, which shook Wall Street—though investors took those surprises in stride, rewarding investors who bought the dip.

Unlike those earlier bouts of volatility, Tuesday’s sell-off lacked a clear a trigger. Disappointing earnings reports sent shares of select companies like Gartner (IT) and PayPal (PYPL) sharply lower, but there were no major updates coming from the usual suspects—such as Trump, the federal agencies that publish inflation and labor market data, the Fed or Big Tech firms.

Rather, the slump appeared to be an acceleration of the moves that have characterized markets so far this year. Software stocks have been dogged by concerns that the rise of AI and “vibe coding” will upend the industry. Those shares were hit particularly hard Tuesday, with Intuit (INTU) down more than 11% and Salesforce (CRM) slumping nearly 7%. Some market watchers attributed Tuesday's sell-off to the release by AI startup Anthropic of workplace productivity tools that some investors fear will disrupt the enterprise software and data industries.

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The software carnage quickly spilled over into the wider market. The tech giants that have been treading water so far this year also slipped. Chip giants Nvidia (NVDA) and Broadcom (AVGO) each declined about 3%. Most of the Magnificent Seven—Apple (AAPL) and Tesla (TSLA) being the exceptions—shed more than 1%. Tech investors are preparing for big earnings reports from Mag 7 members Alphabet (GOOG) and Amazon (AMZN) in the coming days.

Meanwhile, red hot memory and data storage stocks yet again rose on Tuesday. Shares of Western Digital (WDC) surged 7%, while Sandisk (SNDK), shares of which have nearly tripled in value in the last month, gained more than 4%.