A fresh wave of selling swept through global equity markets as an escalation in the Middle East collided with mounting anxiety over technology stocks, rattling investors and derailing a rebound toward record highs.
Chipmakers, which had powered the recovery from war-driven lows, swung violently and sank 4%. The Nasdaq 100 lost 2%. While most shares in the S&P 500 rose, weakness in tech sent the index lower. Oil pared its drop as President Donald Trump said the US must respond to Iran’s attack on an American helicopter, dimming hopes for a quick resolution to their conflict.
The renewed volatility in semiconductor giants comes after a surge that had put the group on track for its best year since 1999. While the industry’s long-term outlook remains tied to a flood of spending on artificial intelligence, investors are increasingly questioning whether valuations can keep pace after one of the market’s most powerful advances.
“As much as we love to see tech’s leadership, it would be constructive to see this rally broaden out to other sectors,” said Bret Kenwell at eToro. “When leadership is concentrated in one corner of tech, the market’s foundation gets a little wobblier.”
The recent whipsawing in tech is giving investors a taste of how quickly the tide may turn for the biggest winners should sentiment flip. While pinpointing the volatility’s cause has been difficult, it’s occurring in high-valuation stocks ahead of massive new equity issuance, including SpaceX’s expected IPO pricing this week.
A flood of shares from companies seeking capital to fund AI ambitions is raising questions about whether demand will be sufficient to absorb the issuance and what the implications will be for broader valuations.
A deal of SpaceX’s size can be bullish over the long run if it reflects deep demand for innovation and new public-market opportunities, according to Anthony Saglimbene at Ameriprise. However, in the near term, large offerings also raise a basic funding question.
“Where does the money come from?” he said. “Some demand may come from cash. Some may come from new retail participation. But institutional participation in a deal of this scale can also require trimming existing winners, particularly in areas where investors already have large gains.”
Upcoming mega-cap IPOs are “adrenaline” for a bull market hitting its prime, but they do not signal euphoria yet, according to Robert Edwards at Edwards Asset Management.
“We’re at the start of a frenzied buying spree worth riding,” he noted. “True euphoria hits when everyone’s flipping the next IPO ‘wunderkind’ and bankers are rushing questionable, pre-revenue deals that suck up cash. We’re still in the speculative phase, and the run toward euphoria is one you don’t want to miss.”
Corporate Highlights:
- SpaceX · ’s initial public offering has attracted demand from institutional investors for multiple times the available shares, according to people familiar with the matter, as the Elon Musk-led rocket, satellite and artificial intelligence firm’s debut gets closer.
- Anthropic PBC · is widely releasing a version of Mythos that will be blocked from carrying out cybersecurity tasks, months after warning that the powerful AI model could spot and exploit vulnerabilities in critical software.
- Bank of America Corp. · ’s trading desk is seeing momentum gaining steam, with revenue trending higher than the 15% increase the bank forecast last month, according to co-President Jim DeMare.
- Vail Resorts Inc. cut its net income guidance for the full year, attributing the reduction to “historically challenging” weather conditions in the western US.
- GSK Plc agreed to buy Nuvalent Inc. for $10.6 billion, securing a US biotech firm developing treatments for lung cancer as part of the British pharmaceutical company’s effort to rebuild its oncology franchise.
| Key Events This Week |
|---|
| For a list, click here. |
What Bloomberg strategists say...
“While Tuesday is not total risk-off yet, it sends a warning that the AI-momentum trade has lost its one-way nature as dip buyers remain cautious.”
—Michael Ball, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.7% as of 3:21 p.m. New York time
- The Nasdaq 100 fell 1.9%
- The Dow Jones Industrial Average was little changed
- The MSCI World Index fell 0.6%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1544
- The British pound rose 0.3% to $1.3383
- The Japanese yen fell 0.2% to 160.41 per dollar
Cryptocurrencies
- Bitcoin fell 2.7% to $61,783.71
- Ether fell 2.3% to $1,649.96
Bonds
- The yield on 10-year Treasuries declined three basis points to 4.53%
- Germany’s 10-year yield declined two basis points to 3.04%
- Britain’s 10-year yield declined four basis points to 4.90%
Commodities
- West Texas Intermediate crude fell 3.5% to $88.11 a barrel
- Spot gold fell 1.7% to $4,256.15 an ounce