Tech Stocks Drop, Pharma Gains As Sector Rotation Picks Up: What's Moving Markets Tuesday?

Wall Street endured another wave of selling in tech stocks on Tuesday, with the Nasdaq 100 down more than 1% by midday in New York, extending its month-to-date slide to more than 5%.

Investors remain in risk-off mode toward 2025's high-flying names as a pivotal week unfolds—one that could determine whether the market still has enough fuel for a late-year rally.

All eyes are now on Nvidia Corp. (NASDAQ:NVDA), the world's largest company and AI boom poster child, which reports earnings after the bell on Wednesday.

Adding to the uncertainty, federal agencies are expected to release delayed key economic indicators later this week—numbers that may affect expectations for Federal Reserve policy.

Rate-cut bets are now evenly split. After recent hawkish Fed remarks, the CME FedWatch Tool shows nearly even odds between a 25-basis-point cut and no move at the December meeting—adding to market tension and uncertainty.

All major indexes traded lower for a second straight session. The S&P 500 is on track for its fifth red day in six, while the VIX surged above 25—up 11% on the day after Monday's 13% jump.

The pain remains concentrated in AI and chips. Concern over stretched valuations continues to weigh on sentiment, with the iShares Semiconductor ETF (NYSE:SOXX) down over 2% Tuesday and heading for its fourth straight daily loss.

Chipmakers are now down 10% this month, on pace for their worst performance since June 2022.

Yet not all sectors are suffering, suggesting a market rotation rather than a broad-based selloff. Healthcare stocks are surging as investors seek safety and visibility into earnings.

The Health Care Select Sector SPDR Fund (NYSE:XLV) is now outperforming its tech counterpart, the Technology Select Sector SPDR Fund (NYSE:XLK), by 14 percentage points this month—the widest performance gap since February 2002.

Eli Lilly and Company (NYSE:LLY), Amgen Inc. (NASDAQ:AMGN) and Merck & Co., Inc. (NYSE:MRK) are the top performers among the 100 largest U.S. stocks this month, up 20%, 14% and 12%, respectively.

Elsewhere, volatility continues to affect crypto markets. The price of Bitcoin (CRYPTO: BTC) tanked to as low as $89,183 on Monday night, before rebounding to $93,000 as of this writing.

Tuesday’s Performance In Major US Indices, ETFs

According to Benzinga Pro data:

• The Vanguard S&P 500 ETF (NYSE:VOO) fell 0.6% to $608.51.
• The SPDR Dow Jones Industrial Average (NYSE:DIA) dropped 0.9% to $462.11.
• The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) fell 0.9% to $598.34.
• The iShares Russell 2000 ETF (NYSE:IWM) rose 0.2% to $233.56.

S&P 500’s Top 5 Gainers On Tuesday

S&P 500’s Top 5 Losers On Tuesday

Read now: Everyone’s Bullish, Cash Is Gone—What Happens If The Fed Doesn’t Cut?

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