The stocks that powered this year's market rally just had their ugliest week in a long time.
The Philadelphia Semiconductor Index, a benchmark for the chip sector, sank roughly 10% over the week — its biggest weekly drop in over a year, according to Reuters. That leaves the index down about 20% from the all-time high it set in late June, and reports from finance.biggo.com say it has now entered a bear market, having plunged more than 9% in just two days.
The damage rippled through Wall Street. On July 17, 2026, the Dow fell 406 points as the selloff deepened, per finance.biggo.com. Individual chip names were hit hard: AMD dropped 5% ahead of its AI Day, according to eciks.org, while Taiwan Semiconductor's U.S.-listed shares slid nearly 3% and broke below $400.
What's driving the retreat? Yahoo Finance points to a mix of geopolitical tensions and worries that chip stocks had simply climbed too high, too fast. Reuters reports the pullback has sparked broader concerns about whether the AI-fueled rally can keep going — and about the leveraged trades that investors piled into on the way up. These are, as Reuters notes, the very same companies that fueled the market's blistering gains earlier in the year.
Why it matters: When a handful of chipmakers account for so much of the market's rise, a stumble in their shares raises the risk that the broader AI trade — and the portfolios riding on it — could unwind together.