The Dow Jones Industrial Average and other leading stock indexes were hit by losses on Tuesday afternoon, primarily due to a downturn in the chipmaking sector. The Dow slipped 118 points or 0.28% to land at 42,939. Meanwhile, the Nasdaq, known for its strong tech focus, and the S&P 500 dipped by 0.8% and 0.4%, respectively. The decline in semiconductor stocks was significantly impacted by the Dutch semiconductor equipment manufacturer ASML. The company's shares plunged more than 16% following an unsatisfactory third-quarter performance and a cut in its 2025 guidance.

Investors are responding critically to the company's prospects. ASML's CEO, Christophe Fouquet, noted in a report that while AI advancements are robust, recovery in other market sectors is slower than expected. ASML plays a unique role in the global tech supply chain as it is the sole manufacturer of advanced chip production equipment. A significant portion of its earnings, nearly half, during the second quarter were from sales to China. However, new export limitations from the U.S. and the Netherlands present critical challenges for its operations in China.

Additionally, Nvidia's shares decreased by over 5% on Tuesday. This followed a recent high, affected by reports that the U.S. might impose restrictions on AI chip exports to certain nations, potentially affecting Nvidia and fellow producer AMD. The proposed export limits are under consideration by the Biden administration due to national security concerns. Other semiconductor stocks resonated with this trend as Advanced Micro Devices saw a 4.9% reduction, while Micron Technology and Broadcom both registered declines of 3.5%. These developments underscore the vulnerability of the semiconductor sector to geopolitical shifts and policy changes, which are now influencing investor sentiment and impacting these critical tech stocks.