Stocks on Wall Street took a hit on Tuesday as concerns about potential interest rate hikes later in the year triggered a sell-off in major technology shares. The S&P dropped by 1.4%, breaking a streak of 11 weekly gains out of the last 12, driven mainly by tech stocks. The Dow Jones Industrial Average, less reliant on tech stocks, initially rose but ended the day down by 0.1%. The Nasdaq Composite fell by 2.2%.
In Canada, the TSX/S&P, the primary stock index, closed 0.2% lower, mirroring the downward trend in global markets. Asian markets experienced declines, with South Korea’s KOSPI plummeting by 10%. European stocks also saw a slide.
Tech stocks, particularly those that have surged in value due to the AI technology hype, were the primary drag on the market. These companies, with their inflated stock prices, exerted significant influence on the broader market direction.
Despite more stocks in the S&P 500 gaining than falling on Tuesday, the dominance of tech companies offset gains elsewhere. Micron Technology saw a 13.2% decline, Nvidia fell by 4.1%, and Samsung Electronics dropped by 12.3%.
SpaceX showed volatility in early trading but closed 1% higher. The space exploration and AI firm, which recently had a successful market debut, is planning a bond offering to raise funds for AI development.
In the oil market, the price of Brent crude held steady around $77 US per barrel. Prices remain elevated from pre-Iran war levels of approximately $70 US per barrel.
The anticipation of interest rate hikes this year has dampened the soaring AI-related stocks, with concerns that higher rates could hinder economic growth. Analysts have warned of a possible correction in the overvalued tech sector, which has seen substantial gains throughout 2026.
The U.S. Federal Reserve’s indication of potential rate hikes has led to market expectations of an 85% chance of a benchmark interest rate increase in 2026. Bond yields, though slightly down, remain elevated amidst inflation worries.
European shares, led by losses in semiconductor and chip-equipment makers, declined, with the STOXX 600 down by 0.51%. In Asia, Japan’s Nikkei 225 lost 3.6%. South Korea’s KOSPI, previously at record highs, dropped by 10% due to significant tech sell-offs and regulatory concerns in the semiconductor sector. Hong Kong’s Hang Seng Index fell by 1.8%, while the Shanghai Composite shed 1.4%.