Stocks on Wall Street faced a decline on Tuesday as concerns over potential interest rate hikes later in the year led to a sell-off in major technology stocks. The S&P dropped by 1.4%, breaking a streak of 11 weekly gains out of the last 12. The Dow Jones Industrial Average, less reliant on tech stocks, saw a slight decrease of 0.1% at the close, while the Nasdaq Composite fell by 2.2%.
In Canada, the main stock index, the TSX/S&P, ended the day with a 0.2% decrease. Markets in Asia experienced declines, with South Korea’s KOSPI plummeting by 10%. European stocks also saw a slide.
Technology stocks, particularly those related to artificial intelligence, bore the brunt of the market downturn due to their inflated valuations. Companies heavily invested in AI technology, like Micron Technology and Nvidia, faced significant drops in their stock prices.
SpaceX, a notable player in space exploration and AI, fluctuated in early trading but closed with a 1% increase. The company, which recently had a successful market debut, announced plans for a bond offering to support AI development.
In the oil market, the price of Brent crude oil remained around $77 per barrel, still elevated from pre-war levels of approximately $70 per barrel.
The anticipation of interest rate hikes this year has contributed to the correction in AI-related stocks, with traders concerned about the impact of higher rates on economic growth. Analysts have warned about the vulnerability of technology stocks to a market correction after their significant gains in 2026.
The U.S. Federal Reserve’s indication of a possible interest rate increase before year-end has led to market speculation, with an 85% probability of a rate hike in 2026. Bond yields, although slightly lower, remain high amidst inflation worries.
Global markets, including Asia and Europe, experienced declines, with major indices facing losses. South Korea’s KOSPI, in particular, saw a significant drop due to sell-offs in tech stocks and increased regulatory scrutiny in the semiconductor sector. Japan’s Nikkei 225 and various European indices also registered losses as markets cooled off after a period of strong performance.