Tech stocks came under pressure before the bell on Tuesday. A sharp sell-off in Asian chip names revived worries about the AI trade, overshadowing lower oil prices and a steady stream of corporate earnings.

Contracts on the Nasdaq-100 fell about 0.5% in pre-market trading, pointing to another weak session for the tech-heavy index. Futures on the S&P 500 were roughly flat, while Dow Jones Industrial Average futures edged up around 0.2%, a split that captured the day’s tug-of-war between wobbly technology shares and steadier blue chips. The Cboe Volatility Index, Wall Street’s so-called fear gauge, hovered near 18.8.

The trigger came from Asia. South Korea’s Kospi benchmark tumbled more than 10% on Tuesday, its steepest one-day drop in years, as investors dumped shares of the world’s two largest memory-chip makers. SK Hynix sank more than 14% and Samsung Electronics fell about 13%. The damage spread to Europe, where Dutch chip-equipment maker ASML dropped nearly 6% at the open. It was a stark reversal from earlier this month, when chip stocks staged a sharp rebound and lifted the Nasdaq.

The AI circular-financing worry

Sentiment soured further on reports that Nvidia is exploring a $250 billion funding backstop for OpenAI, a move that would knot the two companies together even more tightly. Investors have grown wary of these so-called circular financing arrangements, in which a chipmaker helps fund a customer that then buys its chips. Traders also fretted that Chinese rivals are narrowing the AI gap with U.S. firms, which would weaken the payoff from the industry’s enormous capital spending.

Oil, meanwhile, kept retreating. Prices eased after the United States and Iran halted active fighting, with President Trump saying the two sides were in diplomatic talks. italic“There’s a good chance that something could happen, and if it does, good,”/italic Trump told reporters aboard Air Force One on Monday. Falling crude usually helps equities by easing input costs, but on Tuesday the relief was buried under the chip rout.

All eyes on Warsh’s Fed

The bigger event begins today in Washington. The Federal Reserve kicks off a two-day policy meeting on Tuesday, and Chair Kevin Warsh will announce the rate decision Wednesday at 2:00 p.m. Eastern Time, followed by a press conference at 2:30 p.m. The central bank’s target range currently sits at 3.50% to 3.75%.

This is one of the harder calls in years. Market pricing skews toward the Fed holding rates steady, but conviction is thin, and a rate hike is not off the table given sticky inflation. Warsh took over the Fed in May and has leaned hawkish since, a stance that has left investors debating whether his committee will actually raise rates rather than cut. Because this meeting does not include a refreshed Summary of Economic Projections, the “dot plot” that maps out policymakers’ rate expectations, the statement wording and Warsh’s tone at the podium will carry the market signal.

Earnings and data on deck

The corporate calendar is heavy. Household names including Visa, Coca-Cola, Boeing, Ford and PayPal report Tuesday, offering a broad read on consumer and industrial demand. SK Hynix is due to post results around 8:00 p.m. ET, a print traders will parse closely for clues on whether the memory sell-off reflects fundamentals or fear. On the economic front, the Conference Board’s consumer confidence reading lands at 10:00 a.m. ET.

What to Watch for the Open

  • Chip contagion. Watch whether U.S. semiconductor names follow Asia lower at the bell or find buyers. A stabilizing Nasdaq would suggest the sell-off stays contained to memory makers.
  • The fear gauge. A VIX pushing above 20 would flag that the chip scare is bleeding into broader risk appetite ahead of the Fed.
  • Fed positioning. Treasury yields and rate-sensitive sectors will telegraph how traders are leaning into Wednesday’s decision. Investors nervous about concentrated tech exposure sometimes rotate toward broader baskets, such as S&P 500 funds that strip out the “Magnificent Seven”.
  • Earnings tone. Guidance from Visa and Coca-Cola will show whether the consumer is holding up as the Fed weighs its next move.

With a chip shock overnight and a knife-edge Fed decision less than 36 hours away, Tuesday sets up as a positioning day. The real fireworks wait for Warsh on Wednesday.