Semiconductor selloff spreads from Asia to US markets

Dollar index hits one-year high; 2-year Treasury yield at 4.23%

Crude oil falls as supply concerns ease

A trader works on the floor of the New York Stock Exchange on Tuesday (local time). [Yonhap]
A trader works on the floor of the New York Stock Exchange on Tuesday (local time). [Yonhap]

US stocks closed sharply lower Tuesday as a selloff in AI-related technology and semiconductor shares spread from Asian markets to Wall Street, while renewed concerns about further Federal Reserve interest rate hikes dampened investor sentiment.

The Dow Jones Industrial Average closed down 45.87 points, or 0.09 percent, at 51,666.84 on the New York Stock Exchange on Tuesday (local time).

The S&P 500 fell 107.33 points, or 1.44 percent, to 7,365.46, while the Nasdaq tumbled 579.56 points, or 2.22 percent, to 25,587.04.

The selloff, which originated in Asian markets, intensified as it swept into US trading. The S&P 500, which had risen in 11 of the past 12 weeks, snapped its winning streak, while the tech-heavy Nasdaq led the three major indexes lower with a decline of more than 2 percent.

Wall Street was dragged down by weakness from Asia, where South Korea's Kospi fell roughly 10 percent and Samsung Electronics and SK Hynix each tumbled around 12 percent. Valuation concerns and caution about peak levels in AI-related stocks spread broadly, sending the Philadelphia Semiconductor Index down 7.87 percent.

Micron Technology, which is set to report earnings, plunged 13.18 percent. Other major chipmakers also fell across the board — Intel dropped 6.14 percent, Qualcomm lost 8.01 percent and Nvidia slid 4.13 percent. Tesla declined 5.79 percent, reflecting weakening sentiment toward growth stocks broadly. SpaceX, which had plunged more than 16 percent the previous day, edged up 0.98 percent.

Currency and bond markets reflected growing expectations of further Fed tightening. The dollar strengthened as some market participants raised the possibility of a rate hike as early as September to combat inflation.

The dollar index, which measures the greenback against a basket of major currencies, rose 0.4 percent to 101.38, reaching its highest level in a year. The yen traded at around 161.56 per dollar, approaching its weakest level in 40 years. The euro fell below $1.138, hitting a one-year low, as expectations for further European Central Bank tightening faded.

US Treasury yields, which had surged recently, paused Tuesday. The 2-year Treasury yield fell 5 basis points from the previous session to 4.23 percent, though it remained at its highest level in 16 months. The 10-year yield edged down 2 basis points to 4.49 percent.

Oil prices extended their decline as supply concerns eased. Markets calmed somewhat after the US government announced a 60-day temporary sanctions waiver and tanker traffic through the Strait of Hormuz showed signs of resuming.

August-delivery Brent crude futures settled down 1.05 percent at $77.08 a barrel, while West Texas Intermediate futures fell 0.88 percent to $73.21 a barrel. Gold dropped 1.6 percent to $4,122.69 per ounce, weighed down by concerns over the prospect of further rate hikes.

Investors are also watching the personal consumption expenditures price index due this week, which markets view as a key gauge for assessing the likelihood of further Fed rate increases.

"After a sharp run-up, some consolidation over a period of time is a perfectly rational development," said Brock Weimer, investment strategist at Edward Jones. "The market will remain more sensitive to interest rate and inflation data for now."


hajun825@heraldcorp.com