The S&P 500 index saw fluctuations as anxieties surrounding artificial intelligence (AI) and a downturn in chipmaker stocks counteracted the positive impact of falling oil prices. Initially, stocks worldwide climbed, buoyed by hopes of renewed diplomatic efforts between the US and Iran, which eased Middle East tensions. This revival in risk appetite boosted the S&P 500 by approximately 1%, supported by strong corporate earnings, particularly from tech shares and rebounding chipmakers.
However, the market later faced a "reality check" as a significant selloff in several technology giants fueled concerns that the AI frenzy powering the equity bull market might be exaggerated. This tech rout affected global stocks, with the Nasdaq 100 sinking 3.3% and a key gauge of chipmakers, which had doubled from war-driven lows, sliding about 8%. Losses were more pronounced in Asia, where South Korea's Kospi plunged 10% from a record.
Micron Technology Inc.'s shares, for instance, dropped 13% amidst this volatility. The selloff was triggered partly by a local report indicating SK Hynix Inc. was shifting towards cheaper products, impacting memory providers. Despite this, some strategists, like Louis Navellier, suggested viewing any dip as a "buying opportunity" ahead of Micron's results, which were expected to clarify AI demand. However, the S&P 500 eventually closed down 0.5%, and the Nasdaq 100 erased early gains to end down 0.2% on a separate occasion, as rising oil prices and Treasury yields overshadowed gains in chipmakers.
Brent crude oil, which had initially dropped to around $91, later ticked higher to $91 a barrel, contributing to market jitters. The US 10-year Treasury yield also edged higher to 4.73%. This broader market unease led to a "risk-off" trade, with Treasuries rising and haven currencies like the Japanese yen and Swiss franc outperforming. Bitcoin also fell 3%, reflecting the cautious sentiment among investors.
