Volatility returned to global markets as investors sold technology shares and reignited concerns about the sustainability of the artificial intelligence rally.
The tech-heavy Nasdaq dropped 2.21% on Tuesday, while the S&P 500 lost 1.44%, led by sharp declines in semiconductor and AI-related stocks. The Dow Jones Industrial Average, which carries less exposure to technology companies, edged down by around 0.1%.
The sell-off intensified after heavy losses spread across Asian markets. In South Korea, the Kospi index plunged 10%, triggering a circuit breaker and halting trading for 20 minutes to calm market activity.
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Memory chipmakers SK Hynix and Samsung each fell more than 12%, placing significant pressure on the broader South Korean market due to their large index weighting.
Market analysts said increased swings reflected investor concerns over elevated valuations in technology stocks.
James Reilly, senior markets economist at Capital Economics, said the volatility suggested excessive optimism and raised questions about whether the market rally could continue at its current pace.
US markets had already started the week under pressure, with the Nasdaq declining on Monday before extending losses. The weakness carried into Asian trading and accelerated during Tuesday’s session.
Analysts noted there was no single event behind the sharp moves. Instead, investors appeared to lock in profits after months of strong gains and reassess expectations surrounding AI growth.
Technology companies also faced pressure from changing sentiment around interest rates. Some investors remained cautious after comments from Federal Reserve Chairman Kevin Warsh reinforced the central bank’s commitment to controlling inflation, increasing expectations of possible rate rises later this year.
Chipmakers recorded some of the steepest declines. Micron Technology fell 13%, Marvell Technology dropped 9%, Nvidia declined around 4%, and Oracle lost more than 5%, extending its monthly losses.
Despite recent weakness, technology stocks remain well above earlier levels. The Nasdaq continues to trade roughly 10% higher this year, although it has retreated from record highs reached earlier in June.
Markets showed signs of stabilisation on Wednesday. South Korea’s Kospi recovered about 3%, while Samsung regained much of its previous losses.
Analysts said investors have shifted attention away from geopolitical tensions and returned their focus to AI spending, company valuations and future interest-rate expectations.
Global markets remain highly sensitive to changing sentiment, and even modest shifts in expectations continue to trigger sharp moves across technology shares.
