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Nasdaq 100 edges toward correction as semiconductor selloff deepens
The Nasdaq 100 fell 1.0% Tuesday and is down 9.5% from its June 2 record, while the SOX dropped 4.5% and has fallen 25% since its June 22 high.
The Nasdaq 100 inched closer to a technical correction Tuesday as the semiconductor selloff worsened and investors questioned the payoff from big tech spending on artificial intelligence, LiveMint Markets reported, citing Bloomberg’s “AI Quick Read.”
The tech-heavy index fell 1.0% and is down 9.5% from its record set on June 2, just short of the 10% level that typically marks a correction. The Philadelphia Stock Exchange Semiconductor Index, or SOX, dropped 4.5% and is down 25% from its June 22 high, crossing the usual definition of a bear market for semiconductors.
According to Mark Luschini, chief investment strategist at Janney Montgomery Scott, the AI trade has turned more skeptical and is developing into a one-way selloff. He pointed to a negative feedback loop where companies that previously generated high free cash flow are seeing spending on AI reduce it or even push them toward cash-flow negative.
The selloff reflects broader concerns about whether AI-related capital expenditures will sustain returns, LiveMint Markets said. It also noted that last week Alphabet suffered its largest one-day drop in more than a year after reporting negative free cash flow for the first time as a public company due to heavy AI capex, and it cited upcoming earnings from Microsoft, Meta Platforms, and Amazon.com.
Latest closeNasdaq Comp. 24,876.91 ▼0.2%