Stocks experienced a decline on Wall Street on Tuesday amid a sell-off in major technology shares, which extended from Asia to the U.S. due to concerns regarding potential interest rate hikes by year-end. The S&P dropped 1.4%, breaking its winning streak of 11 out of the last 12 weeks, mostly driven by tech stocks. The Dow Jones Industrial Average, less tech-dependent, initially gained but ended down 0.1%. Meanwhile, the Nasdaq Composite fell by 2.2%.
Canada’s primary stock index, the TSX/S&P, closed slightly lower by 0.2%. Asian markets, including South Korea’s KOSPI, which saw a significant 10% drop, as well as European markets, also witnessed declines.
Technology companies, particularly those riding high on artificial intelligence technology hype, exerted the most significant drag on the market due to their inflated stock prices, influencing the broader market direction. While more stocks within the S&P 500 were gaining than falling, tech firms dominated the losses.
Key tech players like Micron Technology, Nvidia, and Samsung Electronics faced notable declines, with Micron slumping by 13.2% and Nvidia by 4.1%. Despite fluctuations, SpaceX closed 1% higher after a recent market debut and plans for a bond offering to support AI development.
In the oil market, Brent crude prices remained around $77 US per barrel, elevated from pre-Iran war levels of approximately $70 US per barrel four months ago.
The growing anticipation of interest rate hikes in 2026 has tempered the soaring AI-related stock prices, with concerns that elevated rates could impede economic growth. Analysts caution that the tech sector, which has seen substantial gains, may be ripe for a correction.
The U.S. Federal Reserve has hinted at a potential rate increase, with Wall Street anticipating an 85% chance of a benchmark interest rate hike this year. Bond yields, reflecting inflation worries, remained high, despite a slight dip in the two-year Treasury yield.
European and Asian markets also saw declines, with Japan’s Nikkei 225 down by 3.6% and South Korea’s KOSPI tumbling 10% from record highs. Regulatory concerns in South Korea’s semiconductor sector added to the tech stock sell-off. Hong Kong’s Hang Seng Index slipped by 1.8%, and the Shanghai Composite shed 1.4%.
