US Tech Rout Intensifies: Nasdaq Plunges Over 3% as 'AI Exuberance' Fear Triggers Global Risk-Off Wave
Sharp sell-off swept through major U.S. stock markets on Tuesday, driven by an intensified technology rout that dragged down key indices and immediately sparked a broader risk-off sentiment worldwide. The highly tech-centric Nasdaq 100 saw a massive decline, plummeting 3%.The S&P 500 registered a substantial decline of 1.5%, while the Dow Jones Industrial Average slipped by 0.6%. This downturn followed significant weakness seen in technology stocks during the previous trading session, with selling pressure accelerating significantly overnight across U.S. markets.
Semiconductors and Memory Chip Stocks Under Severe Strain
The tech sector faced particular pressure as shares linked to the memory-chip segment came under heavy strain, disproportionately weighing on overall market sentiment. A key semiconductor index slumped by 7% in trading.Even venture stocks felt the heat; shares of SpaceX fell below their debut opening price, adding to the mounting negative investor sentiment. The weakness was not confined to U.S. indices alone, as Asian markets were also forced into decline reacting to the global technology slump.
Concerns Mount Over AI Exuberance Driving Risk-Off Sentiment
The current period of volatility comes as global equity markets approach the end of the first half of the year. These markets had previously posted strong gains, benefiting from eased geopolitical risks, resilient corporate earnings, and renewed enthusiasm surrounding artificial intelligence.However, market participants are increasingly voicing concerns that expectations regarding AI may have become overly optimistic. Chris Low of FHN Financial noted to Bloomberg that this risk-off trade reflected fear that "AI exuberance may be overdone."
Foreign Investors Dump $2.5 Billion in Korean Equity Markets
The downturn gained significant pace following a volatile trading session in South Korea, which is one of the world's best performing equity markets this year. What started as a mild risk-off move quickly escalated into a wider sell-off across global exchanges.Foreign investors were heavily active in the KOSPI, reportedly dumping more than $2.5 billion worth of shares. Analysts credited the sharp decline in the region to heavy selling within exchange-traded funds linked to major chipmakers such as SK Hynix and Samsung Electronics. This was further compounded by forced liquidations from leveraged retail investors.
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