Global Tech Selloff Deepens as Rate Hike Expectations Surge

The S&P 500 fell 1% and the Nasdaq Composite dropped 1.6%, fueled by a 7% slide in the semiconductor sector. Nvidia shares slipped 3% and Tesla fell 5%, reflecting a broader trend of profit-taking. Amanda Agati, chief investment officer at PNC Asset Management Group, noted that technical indicators for the SOX index reached their most overbought levels in three years, suggesting that market positioning and valuations had become excessively stretched.

European indices mirrored the weakness, with the STOXX 600 down 0.51% following a dramatic 10% plunge in Seoul’s KOSPI index. Global sentiment remains fragile as analysts question the sustainability of AI infrastructure spending, particularly as major corporations consider issuing equity to fund expansion. Meanwhile, the U.S. dollar index climbed to one-year highs, bolstered by money markets almost fully pricing in a rate hike by September. This shift has placed immense pressure on the yen, which traded at 161.53 per dollar, prompting discussions of potential government intervention between Japanese Finance Minister Satsuki Katayama and U.S. Treasury Secretary Scott Bessent. Commodities also faced headwinds, with gold falling 1.5% to $4,127 an ounce and Brent crude remaining below $80 a barrel despite ongoing geopolitical tensions in the Middle East.