Stock Market Struggles as Technology Stocks Retreat

On Tuesday, stocks on Wall Street experienced a decline influenced by a sell-off in technology stocks. This trend originated in Asia and moved back to the U.S. due to concerns over possible interest rate hikes by the end of the year.

The S&P 500 index fell by 0.9%, having previously achieved gains in 11 out of the last 12 weeks, primarily driven by technology stocks. The Dow Jones Industrial Average, with less reliance on technology stocks, decreased by 8 points, under 0.1%, by 10:42 a.m. Eastern Time. Meanwhile, the Nasdaq composite dropped by 1.4%.

Asian markets saw declines, notably with South Korea’s Kospi plunging by 10%. European stocks also fell. Technology stocks posed the greatest pressure on the market, especially those with inflated stock values due to enthusiasm around artificial intelligence (AI) technology. Within the S&P 500, technology firms counteracted gains in other sectors, with Micron Technology dropping 9.7% and Nvidia down 2.6%. In South Korea, Samsung Electronics declined by 12.3%.

SpaceX, engaging in space exploration and AI, fluctuated in early trading but increased by 1.8%. The company plans to raise funds via a bond offering aimed at supporting AI developments.

Anticipation of future interest rate hikes has contributed to pulling down AI-related stock valuations. Concerns exist that increased rates could slow economic growth. Major indexes have reached record highs throughout 2026, with the tech sector of the S&P 500 rising 27% over the past three months and 18% for the year. South Korea’s Kospi has nearly doubled in 2026.

Heavy investments in AI technology by many tech firms may be dampened by potential rate hikes, affecting investment prices. The Federal Reserve is contemplating an interest rate increase this year, with Wall Street estimating an 85% likelihood, up from 60% a week earlier. The 10-year Treasury yield dropped to 4.49% from Monday’s 4.51%, while the 2-year Treasury yield decreased to 4.20% from Monday’s 4.24%. Though worry about inflation keeps bond yields high.

Inflation has been rising throughout the year, with tariffs briefly curbing its growth before tension between the U.S. and Iran increased energy costs, including gasoline prices. Elevated energy prices have added to shipping expenses across various goods, affecting business and household budgets.

This June, a report showed consumer prices increased by 4.2% in May, marking a three-year peak. Another report expected Thursday aims to provide the Fed’s preferred inflation measure, forecasting a 4.1% increase in May. Amid negotiations to end hostilities between the U.S. and Iran, oil prices have somewhat decreased. U.S. crude oil fell by 1.7% to $72.60 per barrel, and Brent crude fell by 1.7% to $76.54 per barrel, though still above the pre-war levels of around $70 per barrel.

AP Senior Producer Mayuko Ono in Tokyo contributed to this report.