The Nasdaq composite fell about 1% on Tuesday, its largest single-session decline following a rebound since early January, extending a volatile stretch in chip stocks that has raised broader concerns about the durability of the stock market’s record run.
The S&P 500 fell 0.3% on Tuesday, but nine of its 11 sectors traded positively, including real estate, consumer staples and healthcare, the Wall Street Journal reported. The divergence between the broadly negative headline indexes and the positive performance of many sectors reflects a rotation underway as investors seek alternatives to technology shares.
“A lot of these [chip] stocks were just trading on emotion and momentum with no regard to valuations,” Joshua Schachter, chief investment officer at Easterly Snow, told the Journal. “There’s plenty of opportunities elsewhere.”
One destination that has drawn investors is transportation stocks. The Dow Jones Transportation Average, which tracks 20 of the largest airline, trucking and railroad companies, has climbed for five straight sessions, pushing its 2026 gain to 29%, the Journal reported. Among stocks that have hit records in recent days are trucking firm Old Dominion Freight Line, up 59% this year, Ryder System, up 45%, and logistics company Matson, up 57%.
A stronger-than-expected May jobs report — showing the U.S. economy added 172,000 jobs — raised worries that interest rates would climb but also reassured investors about the economy’s underlying health, factors that have boosted transportation stocks, which are sensitive to economic demand.
Strong earnings growth has also powered the broader market’s advance. Companies in the materials sector reported a roughly 42% jump in profits as of Friday, while consumer discretionary and financials have seen 41% and 22% increases, respectively, according to FactSet data cited by the Journal. Analysts expect a 22% surge in second-quarter profits and a 23% jump for the full year.
For investors worried about the outsized influence of a handful of chipmakers on market direction, an alternative has been the equal-weighted version of the S&P 500, which gives each company the same influence regardless of market value. That index has gained more than 8% this year, slightly ahead of the market-cap-weighted version’s 7.9% advance.
Options market data suggests heightened anxiety. More than 50 million bearish “put” option contracts changed hands during Friday’s tech selloff, the second-highest daily volume on record, according to Cboe Global Markets data. Options volume tied to the S&P 500 hit a record 7.8 million contracts on Friday, with around 64% classified as zero-day-to-expiry options.
Some investors have turned to international markets. South Korea’s Kospi has surged 92% this year, but that rally has been driven largely by chipmakers Samsung and SK Hynix. Other investors have looked to Japan, where the Nikkei is up 30%, and the U.K., where the FTSE 100 has gained 3%, reviving an early-year bet that the U.S. lead over other markets would narrow, the Journal reported.
The rotation comes as a wave of new tech stock supply looms, beginning with SpaceX’s public offering on Friday, which some investors worry could further pressure the semiconductor-dominated rally.