Global stocks on Wall Street continue to record a downward trend, spearheaded by heavy losses in the technology sector, following a bearish session that triggered a new wave of concern in international markets.
In Asia, indexes closed generally lower at the end of the session, with the Kospi of South Korea – an index highly exposed to technology – recording a 10% drop. The decline was mainly attributed to the heavy losses of SK Hynix and the tech giant Samsung, which closed the session with losses exceeding 12%.
In Europe, the picture was no better. Stocks fell sharply, with the pan-European index Stoxx 600 losing about 1%, limiting, however, part of its intraday losses. The technology sector in the Stoxx 600 led the decline with 3% losses, while STMicroelectronics and ASMI recorded a plunge of over 7%, logging some of the worst performances of the day.
On the other side of the Atlantic, futures for the Nasdaq 100 – an index hosting giants like Nvidia, Apple, Alphabet and Microsoft – fell 2.7% before the market opening.
In pre market trading, the iShares Semiconductor ETF recorded a 6.2% decline, while the semiconductor sector faced heavy pressures. Intel slid by 7.6%, Micron lost 8.5% and AMD recorded a 6.2% decline. Nvidia was found 3% lower, confirming the wave of liquidations in the tech sector.
The fall of SpaceX
Global markets received additional pressure following the report of a 600 billion dollar valuation wipeout at SpaceX. The stock continued its downward path, falling 3% in pre market trading, after the 16% plunge of the previous session on Monday.
The sell off in the tech sector also led the S&P 500 and the Nasdaq Composite lower, as investors abandon the so called Magnificent Seven stocks. Amazon and Meta recorded further losses in the pre market trading of Tuesday as well, falling just over 0.7%.
Despite the wave of pressure, analysts attempt to lower the tones. Tom Hulick, CEO of Strategy Asset Managers, stated to CNBC that he sees no immediate risk of a collapse, pointing out that markets remain "very fluid" and are supported by strong earnings momentum.
"I don't think we're anywhere near any kind of catastrophic failure in the markets. There's too much liquidity out there and earnings momentum is very strong right now," he characteristicly reported.
Particular reference was also made to artificial intelligence, with him noting that the massive capital investments of trillions of dollars can skyrocket valuations to "stratospheric levels" for companies like SpaceX or Anthropic, without however being able to predict which players will dominate in the future.
From the side of Wedbush, Dan Ives described the correction as an opportunity for investors, emphasizing that the pressure on tech stocks is intensifying due to fears of contagion from the overheating of the KOSPI to the American markets.
As he noted, nervousness is also reinforced by the upcoming announcement of results from Micron on Wednesday, while he warned that markets will continue to go through "moments of intense stress" in the tech trade, as the artificial intelligence revolution remains still in an early stage.
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