US Stock Market Crashed: Why Nasdaq 100 Fell 525 Points And Nasdaq Underperformed Dow Jones, S&P 500?

A series of factors played a major role in toppling the US stock market on July 7th after a record-breaking last week. The Nasdaq 100 crashed the most by 525 points despite the entry of Elon Musk's SpaceX on the index. Meanwhile, the Nasdaq Composite index underperformed both its Dow Jones and S&P 500.

Renewed selloffs in chipmakers; a decline in SpaceX; Microsoft's job cuts, coupled with Samsung's quarterly earnings data; and reports of DeepSeek developing its own AI chip were all among the top factors for frenzied selling in tech-heavy indexes. Moreover, the new exchange of airstrikes between US-Iran, which drove crude oil prices and the dollar higher, also dampened appetite for equities. On Wednesday, investors will await FOMC minutes for further clues on rate hikes in 2026.

Nasdaq Composite + Nasdaq 100

The Nasdaq 100 index crashed the most by 524.86 points or 1.8% to close at 29,173.02 overnight. The inclusion of SpaceX was a major factor on Monday, however, Musk's rocket stock failed to grab fresh buying and nosedived by nearly 7% to close around Rs 149.47 apiece.

SpaceX lost the most yesterday in terms of market value. Almost $145 billion was wiped out from the stock. Not just that Musk's electric car giant, Tesla also faced sharp decline of 4.02% to $402.90, registering a loss of $63.38 billion in market value.

Then coming to Nasdaq Composite, the Magnificent 7 index holder, plunged by 302.47 points or 1.2% to end at 25,818.69.

The reason behind the losses in Nasdaq 100 and Nasdaq Composite in comparison to Dow Jones and S&P 500 is the sharp selling in chip stocks. Chipmakers like AMD dropped by 6.51% to $516.11 and lost up to $58.61 billion, while Micron Technology dropped by 4.71% to $938.38 with $52.39 billion decline in market-cap. Sandisk crashed by 7.3% and lost $18.76 billion market value to close around $1,618.

"Fresh momentum concerns sent chip shares lower early despite the massive quarterly growth of South Korea's Samsung Electronics. Shares of that stock crumbled in a wave of profit taking, sending shockwaves through the U.S. market a day after participants appeared to re-embrace volatile chip names," said Joe Mazzola, a Charles Schwab Head Trading & Derivatives Strategist.

At the same time, he said, stocks outside of the chip arena were mostly steady to higher in early action, reinforcing the rotation ideas that characterized last week's trading.

Also, Trading Economics data pointed out that chipmakers came under renewed pressure as investors questioned whether AI hyperscalers can sustain elevated infrastructure spending. Samsung's 19-fold jump in quarterly profit also failed to lift sentiment, while reports that China's DeepSeek is developing its own AI chip added to concerns across the sector.

That said, the Dow Jones Industrial Average closed at 52,925.15, down by 130.76 points or 0.25%. And that of S&P 500, the index slipped by 33.58 points or 0.5% to end at 7,503.85.

US Stock Market Outlook On July 8:

The FOMC minutes scheduled for Wednesday could help investors to find fresh directions for Wall Street.

As of now, market is predicting 50% chance of rate hike by Fed in 2026, which is higher from earlier 46% probability due to the renewed attacks between US and Iran.

The latest escalation threatened the interim US-Iran peace deal to end the war and pushed oil prices higher, stoking inflation fears and raising prospects for interest rate hikes. Meanwhile, investors awaited the minutes of the Federal Reserve's June meeting for additional clues on the policy outlook after the central bank adopted a more hawkish tone at its June policy meeting. Markets are currently pricing in around a 50% chance of a Fed rate increase in September, up from about 46% a day prior. Elsewhere, data on Tuesday showed the US trade deficit widened to $77.6 billion in May, the largest since March 2025, as per the Trading Economics data.

"The minutes may show how close of a call it was to keep rates unchanged vs. hiking at Warsh's first meeting at the helm," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "Going forward, we believe the Fed will remain on hold for the remainder of the year as it waits to see how the risks to inflation develop. We would not be surprised if the Fed pares back its communication strategy."

US stock futures rebounded on Wednesday owing to new geopolitical risks, surge in crude oil prices, and ahead of FOMC minutes. While US dollar surged above 101.12.