Global stocks sink as tech selloff deepens on inflation fears
Chip stocks led a global selloff Tuesday, with the Nasdaq down 2.21% and South Korea’s Kospi plunging 10% as investors braced for higher rates.
Tech shares led a global rout Tuesday, dragging the S&P 500 down 1.44% to 7,365.46 and the Nasdaq Composite down 2.21% to 25,587.04 as investors pulled back from some of the market’s biggest AI and semiconductor names. The Dow Jones Industrial Average finished down 45.87 points, or 0.09%, at 51,666.84, but the damage was far sharper in growth stocks tied to the recent artificial intelligence surge.
The pressure was heaviest in chips. Micron Technology fell 13%, Sandisk fell 13%, Seagate Technology lost more than 5%, Intel fell 6%, AMD lost almost 6%, and Qualcomm dropped almost 8%. The XLK, the technology sector ETF, fell 4%, while the SMH semiconductor ETF sank 7%. Nvidia fell 4% and Tesla dropped nearly 6%, extending the weakness beyond memory chips and into the higher-profile names that have carried much of this year’s market advance.
The selloff spread quickly overseas. South Korea’s Kospi plunged 10%, its sharpest one-day drop since March, while Japan’s Nikkei 225 fell 3.55%. European shares also weakened, with the STOXX 600 down 0.73%. The move began in the prior session and gathered force overnight as traders reduced risk in crowded trades that had run hard on expectations that artificial intelligence spending would keep justifying higher valuations.
That optimism now looks more fragile against a tougher interest-rate backdrop. U.S. Treasury yields climbed again, with the 2-year yield at 4.23% and the 10-year at 4.50%, levels that make expensive growth stocks harder to defend when future profits are discounted at a higher rate. Investors are also weighing the Federal Reserve’s recent signals that rates could move higher this year, reinforcing the shift away from the low-rate environment that helped power the AI trade.
Amanda Agati of PNC Asset Management Group said the SOX index was at its most overbought level in three years and that expectations, positioning and valuations had become stretched. Ross Mayfield of Baird said the move looked largely technical and was driven in part by profit-taking ahead of Micron’s earnings.
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