Philadelphia Semiconductor Index plunges 5.86%; Nvidia, Micron lead chip selloff

10-year Treasury yield briefly tops 5% for first time since October 2023

WTI above $101, Brent above $105; September rate hike bets add to pressure

Traders work on the floor of the New York Stock Exchange. [123RF]
Traders work on the floor of the New York Stock Exchange. [123RF]

All three major US stock indexes fell Monday as a sharp selloff in semiconductor shares — triggered by calls to slow the pace of AI development — combined with rising Treasury yields to weigh on markets. Oil prices above $100 a barrel and a brief breach of the 5 percent threshold on the 10-year Treasury yield added to the pressure.

The Dow Jones Industrial Average closed down 152.09 points, or 0.29 percent, at 52,421.20 on the New York Stock Exchange. The S&P 500 fell 37.00 points, or 0.48 percent, to 7,619.98. The tech-heavy Nasdaq Composite dropped 146.63 points, or 0.56 percent, to finish at 26,186.41.

Chip stocks bore the brunt of the day's losses after prominent AI industry figures argued that development of cutting-edge AI models should be slowed to allow time for adequate safety measures. Anthropic CEO Dario Amodei was among those calling for a more measured pace.

The Philadelphia Semiconductor Index plunged 5.86 percent to 11,131.28. Nvidia fell 3.36 percent, Micron dropped 5.25 percent, Broadcom lost 4.77 percent, AMD shed 4.40 percent, and Intel declined 5.59 percent. Marvell Technology tumbled 7.32 percent, while SK hynix's American depositary receipts fell 7.6 percent.

Software and cybersecurity stocks bucked the trend. ServiceNow, Adobe and Workday rose 7.41 percent, 5.30 percent and 4.58 percent, respectively. Palo Alto Networks and CrowdStrike surged 13.09 percent and 13.85 percent.

Rising Treasury yields also weighed on equities. The 10-year US Treasury yield climbed as high as 5.014 percent during the session — its highest level since October 2023 — before pulling back to the 4.9 percent range.

Oil prices rose on concerns about disruptions to Saudi Arabian crude shipments. Saudi Arabia is expected to suspend operations on its east-west pipeline, which bypasses the Strait of Hormuz, for several weeks following a drone strike. Brent crude for November delivery settled up 1.02 percent at $105.68 a barrel, while West Texas Intermediate for October delivery gained 1.34 percent to close at $101.39 a barrel.

Markets are also watching the Federal Reserve's upcoming benchmark interest rate decision. According to CME FedWatch, traders are pricing in roughly a 92 percent probability of a rate hike in September.

Jay Woods, chief market strategist at Freedom Capital Markets, said a rate hike would be the appropriate move given current economic data and the market outlook. He added that because markets have already priced in much of the increase, stocks could rebound after an actual hike — but a decision to hold rates steady could paradoxically draw a negative reaction.


hajun825@heraldcorp.com