Wall Street's tech-heavy indices saw a significant downturn, bringing to an end a historic weekly winning streak. The S&P 500 fell 2.6%, missing a 10th consecutive week of gains, while the Nasdaq 100 plummeted approximately 5%, marking its largest drop since April 2025. This broad tech selloff was further exacerbated by a 10% tumble in a key gauge of chipmakers. The market reaction was largely attributed to a strong jobs report, which intensified expectations for the Federal Reserve to hike interest rates.
This repricing of the Fed's outlook, driven by concerns over inflation and a hawkish stance from the central bank, coincided with a significant decline in artificial intelligence (AI) shares. These AI-related stocks had previously been a primary driver of the market's rally from earlier lows in the year. Growing concerns about valuations within the AI sector contributed to the widespread selling.
The decline in US stocks suggests a challenging opening for Asian markets, as investors worldwide adjust to the prospect of higher borrowing costs and a less accommodative monetary policy. The shift in market sentiment reflects broader concerns about economic growth and the potential impact of rising interest rates on corporate earnings and investor appetite for risk assets, particularly in the technology sector.
