Global technology stocks faced a sharp sell-off driven by renewed worries over persistent inflation and its impact on interest rates. The Nasdaq Composite dropped over 2%, with key semiconductor and tech companies such as Sandisk, Micron Technology, and Arm each falling more than 10%. Nvidia also declined by more than 4%, reflecting investor concerns that higher borrowing costs could undermine the premium valuations enjoyed by leading artificial intelligence firms.
The broader tech-focused Nasdaq 100 index fell more than 3%, while the S&P 500 lost 1.4%. Smaller stocks declined as well, with the Russell 2000 down nearly 1%. The Dow Jones Industrial Average closed slightly lower. Market participants are increasingly cautious as inflation pressures linked to geopolitical tensions and energy supply disruptions raise the possibility that the Federal Reserve will keep interest rates elevated for an extended period.
In this environment, investors question whether the large capital expenditures in AI-related technologies will generate sufficient profits to justify their high valuations. The tech sector’s recent volatility has been called a series of “gut check moments,” signaling that Wall Street is shifting its focus from growth prospects to tangible returns. Analysts describe the current pullback as a "sawtooth pattern" rather than a complete collapse, suggesting ongoing market fluctuations rather than a definitive downtrend.
The downturn followed a steep decline earlier in June, marking one of the Nasdaq 100’s worst sessions since 2025 after a stronger-than-expected jobs report boosted expectations of continued Federal Reserve rate hikes. The pressure affected major tech giants beyond chipmakers. Alphabet shares dropped 5%, Amazon declined nearly 5%, Meta Platforms lost over 2%, and Microsoft fell 3%, despite Micron rising ahead of its upcoming earnings release.
Globally, the tech sell-off extended into Asia, where chipmakers led a significant decline on South Korea’s Kospi index, retreating from recent highs. Investors now await key inflation data scheduled for release later this week—the personal consumption expenditures price index, the Fed’s preferred inflation indicator. This data will be critical in shaping expectations around future monetary policy moves, including the possibility of rate increases as soon as October.