The Nasdaq and the S&P 500 have plunged to over one-week lows, dragged down by sharp losses in semiconductor stocks as investors braced for a more hawkish Federal Reserve and scrutinised growing debt-funded AI spending.
If losses hold on Tuesday, the Nasdaq 100 would lose over $1 trillion in market value. Nvidia fell 3 percent, Alphabet shed 1.2 percent, and chipmakers Intel, Marvell Technology and Advanced Micro Devices fell between 6.2 percent and 8.7 percent.
Memory chipmakers Micron Technology and SanDisk , among the best performers on the S&P 500 this year, slumped 12 percent and 13 percent, respectively.
The Philadelphia SE Semiconductor index tumbled 7.3 percent, while the S&P 500 tech sector index shed 3.2 percent.
A sharp selloff in the previous session rocked US tech heavyweights, driven by doubts over hyperscalers’ debt-backed AI spending despite stretched valuations.
“The AI trade became one of the most crowded trades in global markets. When everybody owns the same stocks, the exit door becomes very small very quickly,” said Nigel Green, chief executive of investment adviser deVere Group.
At 09:35 a.m. ET, the Dow Jones Industrial Average fell 395.32 points, or 0.76 percent, to 51,317.39, the S&P 500 lost 114.96 points, or 1.54 percent, to 7,357.83 and the Nasdaq Composite lost 533.73 points, or 2.04 percent, to 25,632.87.
The rate-sensitive Russell 2000 index fell 1.7 percent. The CBOE Volatility Index, Wall Street’s fear gauge, hit an over one-week high, climbing 2.92 points to 20.13.
Four of 11 major S&P 500 sectors moved higher, with consumer staples rising the most at 1.2 percent. With highly priced tech shares coming under pressure recently, investors have shifted focus to other areas of the market.
Heavily battered software shares also gained with ServiceNow and Atlassian up 2.5 percent each, while Adobe and Salesforce added 1.4 percent and 1.2 percent, respectively, following Monday’s losses.
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