Tech selloff deepens as AI cost fears and hawkish Fed expectations trigger 2% Nasdaq plunge

Nasdaq futures drop 2% as AI cost fears, Fed outlook weigh; SpaceX slips 5%

Wall Street futures plunged Tuesday, led by tech and chip stocks, as investors braced for potential U.S. interest rate hikes and fretted over soaring AI-related spending financed by debt. Mega-cap tech giants and semiconductor firms saw significant premarket drops. Global markets mirrored the cautious sentiment, with crude oil and precious metals also declining. Investors are closely watching upcoming inflation data and developments in the Middle East. Futures tracking the tech-heavy Nasdaq fell more than 2%, leading declines among Wall Street futures on Tuesday, as concerns over imminent U.S. rate hikes and debt-backed corporate spending on AI weighed on investor sentiment. Stocks across the globe, including those in Europe and Asia, came under pressure following a selloff on Wall Street in the previous session, while crude oil ⁠and precious ⁠metals also fell. US MarketsPowered By As on 23 Jun 2026, 01:30 AM IST S&P 500 Top Gainers Super Micro Computer35.46(15.66%) ON Semiconductor131.55(8.16%) Corning209.83(7.65%) Micron Technology1,211(6.82%) Gainers" S&P 500 Top Losers Coterra Energy32.56(-8.62%) Moderna59.35(-7.22%) Palantir Technologies119.50(-6.98%) VeriSign247.69(-6.40%) Losers" The weakness in U.S. artificial intelligence-related stocks is likely to persist as investors worry about ballooning valuations at a time when elevated borrowing costs could make AI spending more costly. Mega-cap names came under pressure in premarket trading, with Nvidia and Alphabet down nearly 3% each, while chipmakers Intel, Marvell Technology and Advanced Micro Devices dropped between 5.5% and 7.5%. Shares of Elon Musk's SpaceX were down 4.5%, as it became the latest megacap to tap the bond market following a blockbuster IPO earlier this month, even after reporting net losses in the previous year. "SpaceX is not yet part of the Nasdaq indexes, but the fact that it is jumping on the ⁠bond train to fund excessive AI and infrastructure spending revives earlier concerns that Big Tech may be spending too much on AI infrastructure and increasingly financing that spending through debt," said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank. At 04:39 a.m. ⁠ET, Dow E-minis were down 318 points, or 0.61%, S&P 500 E-minis were down 109.25 points, or 1.45%, and Nasdaq 100 E-minis were down 824.25 points, or 2.69%. Futures tracking the rate-sensitive Russell 2000 Index fell 1.7%. The CBOE Volatility index, Wall Street's fear gauge, was at an over one-week high, climbing 2.84 points to 20.12. Traders expect the U.S. Federal Reserve to hike borrowing costs by a total of 50 basis points by December, according to the CME Group's FedWatch Tool, up from one 25-basis-point hike two weeks ago, as investors price in hawkish monetary policy under new Chair Kevin Warsh. The yield on the short-term 2-year Treasury note slipped about 4 bps to 4.19%. In the previous session, the yield touched its highest point since February 2025. Concerns over elevated valuations in AI-related names have resurfaced following a strong rally earlier this quarter in the aftermath of the Middle East ceasefire. Chip stocks advanced on Monday, with the Philadelphia SE Semiconductor Index hitting a record high. Micron's results on Wednesday ⁠could offer some clues into the outlook for memory and AI chip sector. Micron tumbled 8.6%, while Sandisk and Western Digital fell about 9.6% and 6.6%, respectively. Investors are keeping a wary eye on developments in the Middle East after the U.S. waived sanctions on Iran for 60 days after the first round of talks under a nascent peace deal, with U.S. President Donald Trump saying he will "do what I have to do" if Iran does not stick to its side of the agreement. Later in the day, attention will turn to a batch of private surveys on June business activity, ahead of closely watched Personal Consumption Expenditures Index, the Federal Reserve's preferred inflation gauge, on Friday. Economists expect the price index to come in at about 4.1%, more than double the central bank's target.

S&P, Nasdaq drop on tech selloff as concerns about hawkish Fed, AI spending mount

June 23 (Reuters) - The Nasdaq and the S&P 500 fell to over one-week lows on Tuesday, dragged down by sharp losses in semiconductor stocks as investors braced for a more hawkish Federal Reserve and scrutinized growing debt-funded AI spending. If losses hold, the Nasdaq 100 would lose over $1 trillion in market value. Nvidia fell 3.7%, Alphabet lost 1%, while chipmakers Intel, Marvell Technology and Advanced Micro Devices fell between 3.8% and 9%. Memory chipmakers Micron Technology and SanDisk, among the best performers on the S&P 500 this year, fell 11% and 12.6%, respectively. A sharp selloff in the previous session rocked U.S. tech heavyweights, driven by doubts over hyperscalers' debt-backed AI spending despite stretched valuations. "The trade has been highly concentrated and flow-driven, which makes it vulnerable to relatively small shifts in sentiment," said Ross Mayfield, investment strategy analyst at Baird. "It does not appear to be closely tied to the fundamentals of the AI story, but rather to the heavy concentration and strong inflows into tech and global tech over the past few months (that are) now starting to unwind." Micron's results, expected on Wednesday, could offer clues on the outlook for the memory and AI chip sector after a searing rally this year. The Philadelphia SE Semiconductor index tumbled 7.6%, while the S&P 500 tech sector index shed 3.2%. At 11:15 a.m. ET, the Dow Jones Industrial Average rose 14.39 points, or 0.03%, to 51,727.10, the S&P 500 lost 83.46 points, or 1.12%, to 7,389.33 and the Nasdaq Composite lost 444.00 points, or 1.70%, to 25,722.61. The rate-sensitive Russell 2000 index was down 0.8%. The CBOE Volatility Index, Wall Street's fear gauge, hit an over one-week high, climbing 2.3 points to 19.58. "When you have this potentially higher rate environment and this competition for money (due to big IPOs) and kind of other uncertainties about oil prices ...the whole market is likely to get more volatile," said Melissa Brown, managing director of investment decision research at SimCorp. The S&P 500 is, however, heading for its strongest quarterly gain in six years, buoyed by a Middle East ceasefire and stronger-than-expected earnings, even as concerns over stretched AI stock valuations resurface. Six of 11 major S&P 500 sectors moved higher, with consumer staples rising the most at 1.9%. With highly priced tech shares coming under pressure recently, investors have shifted focus to other areas of the market. Shares of Elon Musk's SpaceX were last up 2.1%, reversing early losses. More than $600 billion was wiped off the company's market value over the past three sessions. SpaceX, which debuted earlier this month, joined a list of megacaps to tap the bond market to raise capital. Heavily battered software shares also gained with ServiceNow rising 4%, while Adobe, Atlassian and Salesforce added between 0.9% and 2%, respectively, following Monday's losses. Traders are increasingly betting on a second interest rate hike by the U.S. Fed by December, according to LSEG data, compared to expectations of just one 25-basis-point hike two weeks ago, as investors price in hawkish monetary policy under new Chair Kevin Warsh. Investors are keeping a close eye on developments in the Middle East after the U.S. waived sanctions on Iran for 60 days after the first round of talks under a nascent peace deal. Economic data showed U.S. manufacturing activity rose again in June for a fourth straight month as companies placed new orders in anticipation of shortages, but factory employment hit a six-year low. The focus this week will be on the closely watched Personal Consumption Expenditures Price Index data, the Fed's preferred inflation gauge. The data is expected on Thursday. Declining issues outnumbered advancers by a 1.24-to-1 ratio on the NYSE and by a 1.01-to-1 ratio on the Nasdaq. The S&P 500 posted seven new 52-week highs and three new lows, while the Nasdaq Composite recorded 67 new highs and 128 new lows. (Reporting by Johann M Cherian, Twesha Dikshit, Joel Jose and Medha Singh in Bengaluru; Editing by Mrigank Dhaniwala, Sherry Jacob-Phillips and Shinjini Ganguli) By Twesha Dikshit and Joel Jose

Wall St falls at open on tech selloff as concerns about hawkish Fed, AI spending mount

June 23 (Reuters) - Wall Street's main indexes opened lower on Tuesday, following sharp losses in megacap and semiconductor stocks as investors braced for a more hawkish Federal Reserve and scrutinized growing debt-funded AI spending. The Dow Jones Industrial Average fell 22.9 points, or 0.04%, to 51,735.64. The S&P 500 dropped 106.3 points, or 1.42%, to 7,366.51, while the Nasdaq Composite slipped 616.8 points, or 2.36%, to 25,549.757 at the opening bell. (Reporting by Joel Jose in Bengaluru; Editing by Shinjini Ganguli)