Wall Street gave up more of its recent gains Tuesday after a sell-off in big technology stocks spread from Asia back to the US over worries about potentially higher interest rates by the end of the year.
- The S&P 500 fell 107.33 points, or 1.4%, to 7,365.46.
- The Dow Jones Industrial Average, which is less influenced by tech stocks, gave up an early gain and fell 45.87 points, or 0.1%, to 51,666.84.
- The Nasdaq composite fell 579.56 points, or 2.2%, to 25,587.04.
The selling largely targeted companies that have seen their values surge amid the frenzy over artificial intelligence technology, the
AP reports. Their pricey stock values give them more influence over the broader market's direction.
On Tuesday, more stocks gained ground within the S&P 500 than fell, but tech companies overpowered gains elsewhere. Micron Technology slumped 13.2% and Nvidia fell 4.1%. Samsung Electronics slumped 12.3% in South Korea. SpaceX wavered in early trading then closed 1% higher. The space exploration and artificial intelligence company had a soaring market debut less than two weeks ago. The company plans to raise money through a bond offering, partly to fund AI development. The growing likelihood of interest rate hikes later this year has helped deflate the massive run-up in AI-related stocks in recent days as traders worry that the higher rates could hamper economic growth.
Those Big Tech gains have been significant, sending major indexes on record-setting runs throughout 2026. Within the S&P 500, the tech sector alone is up 25.5% just over the last three months and 16.6% for the year. In Asia, South Korea's Kospi has nearly doubled so far in 2026, even after Tuesday's plunge. Analysts have been warning that high-flying technology stocks could be due for a downturn. "Viewed through this lens, a period of consolidation is reasonable, in our view, after such a sharp move higher," wrote Brock Weimer, investment strategy analyst at Edward Jones, in a research note.
Many technology companies have been spending heavily on AI technology. The potential for higher interest rates can stifle future spending and hurt prices for investments. The Federal Reserve has signaled that it could raise interest rates at least once before the end of the year. Wall Street sees an 85% chance that the central bank will raise its benchmark interest rate this year, according to data from CME Group. That's compared to 60% a week earlier.
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