Tech Stocks Tumble as Wells Fargo Warns 'Sugar Rush' Likely Over

The Dow Jones Industrial Average plummeted more than 570 points on Tuesday morning, while the Nasdaq Composite tumbled nearly 3.6%. The sell-off was led by tech stocks, with chipmakers like Nvidia Corp. and Intel Corp. falling between 4% to 14%.

Wells Fargo analyst Ohsung Kwon warned that the recent surge in stock prices is likely over, citing last Friday's 4% Nasdaq selloff as a sign of risks associated with the AI trade. Bank of America Securities strategists also cautioned investors to take profits, noting that 70% of bear market signposts had been triggered.

UBS Global Wealth Management's Alan Rechtschaffen stated that worries about the Federal Reserve's monetary policy direction are weighing on tech stocks, with many expecting a rate cut this year. Crude oil prices also fell, with West Texas Intermediate crude futures dropping 2.37% to around $89.34 per barrel.

President Donald Trump said that a deal with Iran could be reached in 'two or three days,' which could lead to the opening of the Strait of Hormuz. The decline in tech stocks and oil prices weighed on broader market indices, with the S&P 500 index down about 2.2%.