NEW YORK (AP) — A sell-off in big technology companies spread from Asia back to the U.S., pulling the Nasdaq composite down 2.2% in early trading. The growing likelihood of interest rate hikes coming up this year has helped deflate a massive run-up in AI-related stocks in recent days as traders worry that the higher rates could hamper economic growth. The S&P 500 fell 1.5% early Tuesday. The index is coming off 11 weekly gains out of the last 12,
led largely by tech stocks. Micron Technology slumped 12%. The Dow, which has less weighting in tech, held up better with a decline of 0.6%.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Wall Street appears to be heading for another day of significant losses and again, it is the technology sector leading the way down with anxiety growing over probable rate hikes later this year that could hamper growth.
Futures for the S&P 500 fell 1.2% before the opening bell Tuesday, while futures for the Dow Jones Industrial Average retreated 0.4%. Futures for the technology-heavy Nasdaq tumbled 2.6% following a 1.3% loss Monday.
Chip companies were among the biggest losers in overnight trading, with Micron and Intel both down more than 7%. Qualcomm fell 6.3%. Companies that specialize in memory and data storage were also taking a beating. Sandisk fell nearly 9% and Seagate was down 7.2% early.
Elon Musk's SpaceX, which owns xAI, slipped another 1% before the bell after a 16.4% tumble to start the week.
SpaceX trades on the Nasdaq, which has suffered heavy selling for days as investors grow anxious over massive spending by artificial intelligence companies and looming interest rate hikes in the U.S., which will make it more expensive for companies to fund growth through borrowing.
SpaceX was trading just above $156 per share before the bell, still up from its market debut, but down from highs of more than $200 last week.
Oil prices were nearly unchanged at $73.77 a barrel for U.S. crude and $77.71 a barrel for Brent crude, the international standard.
Bond yields stabilized overnight after climbing for the past week on speculation that the Federal Reserve may hike interest rates this year to keep a lid on accelerating inflation caused by months of rising oil prices caused by the Iran war.
Economists are forecasting that a measure of inflation for U.S. consumers — due out Thursday from the government — sped up to 4.1% in May from 3.8% in April.
The yield on the 10-year Treasury settled around 4.49% early Tuesday, up from 4.43% a week ago and 3.97% before the war.
Traders are betting on a nearly 90% chance the Fed will raise its federal funds rate at least once by the end of the year, up from the 57% chance seen just a week ago, according to data from CME Group.
High yields in bond markets worldwide caused by worries about inflation are threatening to slow economies, and they have already sent rates higher for mortgages and other kinds of loans. High yields also hurt prices for investments, particularly those seen as the most expensive. That raises the pressure on companies whose stock prices have soared in the mania around artificial-intelligence technology.
Elsewhere, in Europe at midday France's CAC 40 dipped 0.6%, while the German DAX fell 1%. Britain's FTSE 100 declined 0.5%.
Earlier in Asia, Japan's benchmark Nikkei 225 lost 3.6% to finish at 69,788.38.
Australia's S&P/ASX 200 was down 0.3% at 8,787.00. South Korea's Kospi tumbled 10.0% decline to 8,203.84, dropping from previous record highs due to a sell-off in major technology issues. Signs of greater regulatory scrutiny in the country's semiconductor sector also added to the hand-wringing.
Hong Kong's Hang Seng slipped 1.8% to 23,336.28, while the Shanghai Composite shed 1.4% to 4,106.25.
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AP Senior Producer Mayuko Ono in Tokyo contributed to this report.
