The chip sector took a hit on Tuesday.
Global tech stocks tumbled as investors continued to dump high-priced chip names, and U.S. markets tumbled following sharp declines in Asia.
The Nasdaq 100 fell more than 3% and the S&P 500 fell more than 1%.
Here are the positions of the major indexes as of the 4pm ET closing bell:
• Nasdaq 100:29,347.27, 3.29% decrease
South Korea, the chip industry mecca, recorded heavy losses in the stock market during Tuesday’s trading, with the KOSPI index dropping nearly 10%. This was the index’s largest single-day decline in more than three months.
The semiconductor sector bore the brunt of the selling pressure. In Asia, Samsung Electronics closed 12.3% lower and SK Hynix closed 12.5% lower. Both companies joined the $1 trillion club last month.
In the US, Micron, AMD and Intel led the losses.
The most notable developments in this area include:
SpaceX posted its third consecutive day of losses on Monday, but the results remained relatively flat. After a historic post-IPO rally, the rocket and AI company has shed nearly $400 billion in market capitalization.
Investors appear to be rushing to take profits after the chip sector’s historic rally. The iShares Semiconductor ETF is up 108% since the beginning of the year.
Jefferies strategists said in a note that traders are “increasing tactical concerns about earnings expectations” following the strong rally in semiconductor stocks last month.
“Those who once dominated the market appear to have lost momentum, and investors are shifting to other areas of the market that are more defensive, less AI-focused, and offer more predictable cash flows,” Chris Weston, head of research at Pepperstone, wrote in a post on X.
“The question now is whether U.S. retail investors, filled with FOMO sentiment, will once again emerge as bargain buyers,” top economist David Rosenberg said on Tuesday.
Other leading analysts said the recent selloff should serve as a buying opportunity, and sporadic declines in hot stocks are not surprising.
Wedbush Securities analyst Dan Ives wrote: “Taking a step back, I continue to believe that this market will see a series of ‘testing moments’ in tech, with the AI revolution still in its third inning…this morning is just one of those moments.”
South Korea has become one of the most watched stock markets in the world this year due to the soaring prices of artificial intelligence-related stocks. However, this rise has left the market particularly exposed to reversals in global AI trade.
Bearishness spread across Asia during the session. Japan’s Nikkei Stock Average ended 3.6% lower, while Hong Kong’s Hang Seng Index fell more than 2%. Chinese indicators also fell. The impact has since spread to Europe, with major indexes in Germany and France falling by more than 1%, and the pan-continental Euro Stoxx index also falling.
Other risk assets have also slumped, with Bitcoin falling below $63,000, down about 50% since October.