Nasdaq falls 2% as Big Tech leads sell-off in global stocks

Global stocks fell on Tuesday, led by a retreat in Big Tech, as fears of rising US interest rates and a recent plunge in SpaceX shares soured sentiment towards a sector that has powered markets to record highs this year.

The Nasdaq Composite index fell 2 per cent in early trading, with the S&P 500 losing 1.5 per cent.

Chipmakers – among the most popular bets in the recent artificial intelligence-led market rally – suffered especially steep losses on Tuesday, with Micron and Intel down 12 per cent and 6 per cent respectively.

In Europe, the benchmark Stoxx 600 index was down 0.9 per cent, with chip equipment maker ASML, the region’s biggest company by market value, down 4.8 per cent.

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Arun Sai, senior multi-asset strategist at Pictet Asset Management, said: “It’s a double whammy of building AI scepticism and strong economic growth in the US,” with the latter prompting worries of higher interest rates, as well as making non-tech, cyclical stocks relatively more attractive.

“Investors have been on the lookout for an air pocket in the AI demand acceleration story,” Sai added.

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The early drops in the US add to a rocky month for Big Tech, which has propelled markets higher this year but faces increasing investor concern over whether valuations have become too stretched.

The Nasdaq Composite is down nearly 5 per cent so far in June, snapping two months of hefty gains during which investors piled into the shares of companies tied to the artificial intelligence (AI) boom. The Nasdaq closed down 1.3 per cent on Monday, with Alphabet, Amazon and Broadcom all sliding.

Mohit Kumar, a macro strategist at Jefferies, said the sell-off could be driven by profit-taking ahead of Micron results due on Wednesday. Fellow chipmaker Broadcom’s results earlier in June prompted a broad sell-off in tech stocks, as its AI revenue forecast fell short of the most bullish forecasts.

South Korea’s tech-heavy Kospi index tumbled 10 per cent on Tuesday, with chipmaker SK Hynix and memory chip group Samsung Electronics recording double-digit drops.

Venu Krishna, head of US equities strategy at Barclays, said that “new concerns are emerging” for stocks, “as markets tangle with resurgent inflation, AI capex scales to unprecedented levels and a Fed rate path narrows more than before”.

SpaceX was the most spectacular casualty on Monday, with shares in Elon Musk’s satellite, rocket and AI company closing down 16 per cent at $154.60 (€135.68) and wiping $400 billion from its market value.

The hit to SpaceX’s value ranks as the second-biggest one-day loss suffered by any company, according to an analysis of Bloomberg data, eclipsed only by a drop in Nvidia shares in early 2025.

SpaceX closed with a market capitalisation of $2.03 trillion, down from an intraday peak of almost $3tn on June 16.

Shares in SpaceX were down 2.9 per cent on Tuesday at $150.19, just below the $150 at which they started trading on June 12.

Despite falling in the past three trading sessions, the shares remain above the $135 they were sold at in the company’s record-breaking initial public offering.

On the oil markets Brent crude traded below $78 a barrel after falling 3.3 per cent on Monday, the biggest drop in almost a week, while West Texas Intermediate was near $74.

The prospect that the Federal Reserve will raise interest rates to keep US inflation in check has deepened concerns over valuations, as bigger returns on “risk-free” US government debt reduce the appeal of owning highly valued equities.

SpaceX shares trade at more than 100 times the revenue the company generated last year.

The Fed, led by new chair Kevin Warsh, jolted investors last week by signalling that it was minded to raise rates to counter the inflation threat sparked by the Middle East conflict.

The yield on benchmark 10-year Treasuries has climbed 0.04 percentage points this month to 4.49 per cent.

Futures markets show a quarter-point rate increase is now fully priced in by October this year, much sooner than the April 2027 rise priced in as recently as Monday of last week.

Geoffrey Yu, a senior strategist at BNY in London, said: “Fed expectations have changed and that just raises the bar for other assets to perform.”

Mike Bell, head of market strategy at RBC BlueBay, said “tech stocks have enjoyed a phenomenal rally” but “when stocks have gone up so far, so fast, and there’s a lot of leverage and lots of retail money involved, it doesn’t take much to trigger sharp falls”.