Stocks slide after BofA profit-taking call; chip rout, yields hit

U.S. stocks fell on Tuesday after Bank of America advised clients to take profits, as a selloff in semiconductor stocks and rising Treasury yields put pressure on growth shares. The S&P 500 dropped 1.63%, with technology names leading losses.

Bank of America strategists, led by Savita Subramanian, told clients to lock in gains, noting about 70% of the firm’s bear-market signposts have triggered. The team also flagged that the S&P 500 appeared expensive on 17 of 20 valuation measures, a view that prompted some investors to reduce exposure to equities.

Major indexes moved sharply. The S&P 500 fell to 7,261, the Nasdaq Composite declined 2.86% to 25,188, the Dow Jones Industrial Average slipped 0.50% to 50,533, and the Russell 2000 dropped 1.53% to 279.77. Market breadth was negative, with decliners outnumbering advancers.

Semiconductors were among the weakest groups after Broadcom held its AI revenue estimates steady rather than raising them. Chip stocks widened losses that began late last week; AMD fell about 9.35% and Micron declined about 9.09%. Oracle dropped 5.75% on the session. Apple slid 3.65% following reports that CEO Tim Cook plans to step down in September and John Ternus would be his successor.

Treasury yields remained elevated, with the two-year yield trading above 4.1%. Traders continued to price in the potential for further interest-rate increases later this year. Higher yields pressured growth and technology shares, which underperformed the broader market.

Defensive and income-oriented sectors held up as investors rotated away from growth. Real estate led gains, rising 1.92%, consumer staples advanced 1.47%, utilities added 0.87% and healthcare gained 0.82%. Energy fell 2.13% as oil prices eased, and basic materials declined 1.44% amid a firmer dollar and higher rates.

Company-specific news produced large moves. Nuvalent jumped about 39.5% after GSK agreed to acquire the oncology firm in a $10.6 billion all-cash deal, valuing the company at roughly $124 per share. The deal included late-stage lung cancer drug candidates that could generate near-term revenue if approved.

Investors are focused on the May Consumer Price Index, due Wednesday, and the Federal Reserve’s policy meeting on June 16-17. Strategists and technical analysts note that the S&P 500 needs to hold around 7,333 to avoid deeper technical deterioration. Bank of America’s team said the current mix of signals justifies taking profits, a stance that markets will test as incoming data and Fed guidance arrive.