U.S. stocks staged a recovery from earlier lows on Tuesday morning, following a continued sell-off in memory chipmakers that raised concerns about the sustainability of investments in artificial intelligence. The tech-heavy Nasdaq Composite experienced significant volatility, initially dropping about 1.3% before bouncing back from a nearly 3% decline. In contrast, the S&P 500 reported a loss of 0.8%, while the Dow Jones Industrial Average managed to stabilize, briefly returning to even.
The tech sector has been under pressure, particularly following a rough patch for major players. SpaceX, the aerospace manufacturer led by Elon Musk, reported its third consecutive day of losses. On Tuesday, shares fluctuated considerably, ultimately erasing all gains made since its initial public offering.
Meanwhile, South Korea’s memory chip giants SK Hynix and Samsung Electronics faced a steep decline, with both companies’ shares dropping over 12%. This slump contributed to a broader sell-off in the Kospi Composite index, which plummeted by 10%. These developments have intensified scrutiny surrounding the high valuations associated with AI technology, igniting doubts among investors.
The upcoming earnings report from Micron Technology is eagerly anticipated, as it may provide insight into the strength of demand for memory products. The company’s shares experienced a notable decline of up to 12% after reaching a record high close on Monday.
In addition to tech concerns, geopolitical developments involving the U.S. and Iran also made headlines. Negotiations between the two nations regarding nuclear and peace agreements showed promising signs. Consequently, crude oil futures, including Brent and WTI, fell approximately 1.5% after the U.S. issued a 60-day waiver on oil sanctions against Iran, coupled with new satellite data indicating increased maritime activities in the Strait of Hormuz.
Overall, the trading session reflected a market grappling with mixed sentiments, as investors navigated around the challenges posed by technology stock volatility and international diplomatic negotiations.
