Tech Stock Selloff Accelerates as Memory Chip Crisis Spreads Globally
U.S. and global markets experienced a severe tech-driven selloff on Tuesday, with memory chip stocks plummeting and dragging down major indices. The S&P 500 fell 1.44% and the Nasdaq dropped 2.21%, with Micron Technology shedding more than 10% in what traders fear signals broader semiconductor weakness.
Market Turbulence
The S&P 500 and the Nasdaq Composite were lower on Tuesday as a tech sell-off that began during the prior session picked up steam overnight, with global markets in Asia routed as memory chip-related shares tumbled. The broad market index fell 1.44% to 7,365.46, while the tech-heavy Nasdaq slid 2.21% to close at 25,587.04. The Dow Jones Industrial Average ended down 45.87 points, or 0.09%, at 51,666.84.
Semiconductor Collapse
The chipmaker [Micron Technology] dropped more than 10%, putting it on track for its worst day since June 5, leading a broad selloff in tech. Marvell Technology also shed 8%, while Sandisk lost 11%. European technology stocks shed 2.7% in early trading, with regional chip stocks notching some of the biggest declines in the region. STMicroelectronics was more than 5% lower 25 minutes into the European session, while Dutch semiconductor equipment maker ASMI was down by 5.1%.
Asia-Pacific Rout
Japan's Nikkei 225 declined 3.55% to close the trading day at 69,788.38, breaking eight sessions of gains. The Topix lost 2.56% to close at 3,990.38. Hong Kong's Hang Seng Index fell 1.82% to close at 23,336.28, while mainland China's CSI 300 was down 2.77% to 4,919.39.
Defensive Rotation
The major averages came off their lows as tech stocks outside of chipmakers such as Microsoft and Amazon as well as defensive stocks like Walmart, Procter & Gamble and Johnson & Johnson rose. Additionally, International Business Machines shares popped 5% following an upgrade to overweight at JPMorgan, while Sherwin-Williams and Merck saw gains as well.