Nasdaq slides 1.15%, S&P 500 falls 0.55% as Dow hits record

The Nasdaq Composite fell 1.15% to 26,382.81 and the S&P 500 lost 0.55% to 7,512.44, as technology stocks retreated after a sharp rally fueled by optimism over a U.S.-Iran peace deal.

"We had a big move yesterday in the market," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "We're just digesting some of those gains and the setup in anticipation of the Fed meeting is always a little tentative."

Technology stocks lagged as investors rotated into economically sensitive sectors. Financials and industrials gained, while chip stocks fell sharply after surging in the prior three sessions. The Dow Jones Industrial Average rose 345.54 points, or 0.67%, to 52,016.57 — its second straight record close.

The divergence between the Dow and the Nasdaq reflects a market recalibrating positions ahead of the Federal Reserve's policy decision Wednesday, where Chair Kevin Warsh is expected to hold rates at 3.50% to 3.75%. Traders see a 42% chance of a 25-basis-point rate hike by December, according to CME Group's FedWatch tool.

The selloff in tech coincided with a 5.8% drop in U.S. oil futures, as details emerged of a U.S.-Iran interim deal expected to extend a ceasefire and reopen the Strait of Hormuz. The decline in crude prices, which fell to their lowest levels since early March, offered support to some equity sectors but was insufficient to sustain momentum in heavyweight technology names.

The Nasdaq's 3% surge on Monday — its best session since March 31 — had put the index within 2.7% of its all-time closing high from June 2. Tuesday's pullback pushed it below its 20-day moving average near 26,350, though the 50-day moving average around 25,400 remains a deeper support level, according to Reuters technical analyst Terence Gabriel.

SpaceX shares rallied in their second week of public trading, briefly pushing the rocket and AI company's market value past Amazon and Microsoft before paring gains. The stock's debut on June 12 marked the world's biggest initial public offering, sending its valuation past $2 trillion.

This article is for informational purposes only and does not constitute investment advice.