U.S. stock markets closed mixed on Tuesday as the AI trade disappointed again just after a day of rebound. Investors also digested a series of mixed economic data. Moreover, market participants sentiment remained subdued ahead of the release of two key inflation data and the start of a mega IPO this week. The Dow ended in positive territory while the S&P 500 and the Nasdaq Composite finished in negative territory. 

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 0.2% points to close at 50,872.11 after a choppy session. Notably, 17 components of the 30-stock index ended in positive territory while 13 ended in negative territory. At intraday low, the blue-chip index was down nearly 575 points.

The tech-heavy Nasdaq Composite finished at 25,678.82, sliding 1% or 250.84 points due to the weak performance by AI semiconductor giants. The S&P 500 fell 0.3% to finish at 7,386.65. Eight out of 11 sectors of the broad-market index ended in negative territory while three finished in positive territory. 

The Utilities Select Sector SPDR (XLU), the Real Estate Select Sector SPDR (XLRE) and the Materials Select Sector SPDR (XLB) fell 1.9%, 1.5% and 1.3%, respectively. On the other hand, the Information Technology Select Sector SPDR (XLK) and the Energy Select Sector SPDR (XLE) rose 2.2% and 1.1%, respectively.  

The fear gauge CBOE Volatility Index (VIX) rose 5% to 19.87. A total of 24.77 billion shares were traded on Tuesday, higher than the last 20-session average of 20 billion. Advancers outnumbered advancers on the NYSE by a 1.33-to-1 ratio. On the Nasdaq, a 1.05-to-1 ratio favored advancing issues.

AI Trade Fizzles

AI-powered semiconductor stocks fell once again on Tuesday after rebounding on Monday recouping the disaster they suffered on Friday to a great extent. Strong jobs data for May along with the solid fundamentals of the U.S. economy, raised concerns that the Fed is unlikely to cut the benchmark interest rate anytime soon this year. The sticky inflation rate and recent spike in the yields of U.S. government bonds rang an alarm that the central bank may, in fact, raise the Fed fund rate by the end of this year. 

Consequently, stock prices of major AI chip and memory developers such as, Broadcom Inc. (AVGO Quick QuoteAVGO - Free Report) and Micron Technology Inc. (MU Quick QuoteMU - Free Report) fell 1.1% and 1.4%, respectively. Micron currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Economic Data

U.S. trade deficit in April came in at $55.9 billion, below the Zacks Consensus Estimate of $57.1 billion. The metric for March was revised downward to $56.6 billion from $60.3 billion reported earlier. April exports were $327.1 billion and imports were $383 billion. Year-to-date, the trade deficit fell to $213.5 billion or 49.1%, from the same period in 2025.

The National Association of REALTORS reported that the existing home sales in May came in at 4.17 million units, surpassing the Zacks Consensus Estimate of 4.03 million units. The metric for April was revised marginally upward to 4.04 million units from 4.02 million units reported earlier. 

Wholesale inventories increased by 0.6% in April, beating the Zacks Consensus Estimate of 0.5%. The metric for March was revised upward to an increase of 1.5% from 1.3% reported earlier. 

The National Federation of Independent Business (NFIB) reported that its Small Business Optimization Index for May came in at 95.3, marking its lowest level since October 2024. The metric for May remained below its 52-year average of 98.0. The Uncertainty Index for May reported at 91, remaining well above its historical average of 68.