Nasdaq 100 futures dropped about 1% ahead of the market open as semiconductor stocks plunged again, dragging tech shares lower. Meanwhile, S&P 500 futures edged down slightly, and Dow futures rose on earnings optimism. The sell-off reflects growing anxiety over AI financing and mounting competition from Chinese chipmakers.
Chip Stocks Lead Global Market Decline
After news surfaced that a Chinese state-backed firm is ramping up production of chip-making equipment, investors have pulled back sharply from semiconductor shares. South Korea’s Kospi index tumbled more than 10%, with major memory chip producers Samsung Electronics and SK Hynix sinking 13% and 14% respectively, some of the steepest losses worldwide.
Deutsche Bank analyst Jim Reid highlighted renewed concerns over AI investment budgets and cheaper Chinese rivals driving the semiconductor sell-off. Nvidia shares also fell nearly 5% premarket amid reports it is negotiating a $250 billion funding backstop for OpenAI. This arrangement has sparked worries about circular financing risks, as traders question the sustainability of the AI investment surge.
Federal Reserve Meeting Adds to Market Uncertainty
The Federal Reserve began a key two-day policy meeting Tuesday, with a rate decision scheduled for Wednesday. Despite expectations leaning toward a pause, the possibility of a rate hike remains, contributing to a cautious market mood.
Energy markets found some relief as oil prices dropped following a pause in US-Iran tensions, with President Trump confirming diplomatic talks. On the corporate front, Coca-Cola boosted its full-year outlook after beating second-quarter earnings estimates, offering a rare bright spot amid the tech turmoil.
South Korea’s Kospi plunges over 9% has already reflected the intense pressure on chip stocks this week.
This content is for informational purposes and does not constitute financial advice.
