Nasdaq Declines Amid Sell-Off of Top Stocks

The Nasdaq Composite fell 1.5% on Tuesday as Wall Street sold off some of its biggest winners of the year. Despite a majority of stocks rising, large S&P 500 stocks that have done well this year were among the market's biggest losers. This could potentially be the start of an August corrective move, according to Andrew Brenner, head of international fixed income at NatAlliance Securities.

The Nasdaq Composite (^IXIC) fell by 1.5% on Tuesday, August 20, 2025, as Wall Street sold off some of its biggest winners of the year. This drop was driven by significant losses in tech stocks, with Palantir (PLTR) plummeting by 9% and AMD (AMD) declining by more than 5%. The broader tech sector also saw notable declines, including a 3.5% drop in Nvidia (NVDA) [1].

Despite a majority of stocks rising, large S&P 500 stocks that have done well this year were among the market's biggest losers. This could potentially be the start of an August corrective move, according to Andrew Brenner, head of international fixed income at NatAlliance Securities [2]. The Dow Jones Industrial Average (^DJI) ended the session just above the flat line, while the S&P 500 (^GSPC) slipped about 0.6%.

The tech sector's underperformance was accompanied by gains in more economically sensitive sectors like Health Care (XLV), Homebuilders (XHB), and small- and mid-cap stocks. Real Estate (XLRE), Consumer Staples (XLP), Utilities (XLU), and Health Care were among the standouts. Earlier in the session, earnings reports from retail giants such as Home Depot (HD) and Target (TGT) provided mixed signals about the economic recovery [3].

Intel (INTC) received a boost after SoftBank announced a $2 billion investment, which could position the U.S. government as the company's largest shareholder through the CHIPS Act grants. This move aims to strengthen domestic chipmaking capabilities and stabilize Intel's operations [4].

The market's pullback coincides with investors seeking downside protection, as indicated by the put skew on the Invesco QQQ Trust (QQQ) reaching a three-year high. This suggests that investors are preparing for potential market volatility [2]. The Technology Select Sector SPDR fund (XLK) remained up 12.2% in 2025 despite Tuesday's decline, underscoring the sector's resilience.

In summary, the Nasdaq's 1.5% drop on Tuesday reflects a broader market correction as tech stocks, which have led the market's rally, come under pressure. The market's focus on more defensive sectors and the potential for increased downside protection indicates a cautious approach among investors.

References:

[1] https://finance.yahoo.com/news/live/stock-market-today-nasdaq-drops-over-1-as-palantir-amd-drag-down-tech-200335512.html
[2] https://www.cnbc.com/2025/08/20/tech-is-showing-signs-of-slowing-is-trouble-ahead-for-wall-street.html
[3] https://markets.businessinsider.com/index/market-movers/s&p_500
[4] https://www.nasdaq.com/articles/intels-revival-ahead-after-softbanks-2-billion-investment