Context:

Global equities slid as a tech-led selloff in semiconductors spurred by expectations of a hawkish Federal Reserve and concerns over debt-funded AI spending. The downturn threatened a renewed loss in the Nasdaq 100, with mega-cap and memory-chip names tumbling and the Philadelphia semiconductor index sinking, while some areas of tech and consumer names offered limited support. Investors also weighed the potential trajectory of interest rates, with traders pricing in a higher chance of a December rate hike. In the near term, focus centers on upcoming inflation data and the Fed’s policy path, alongside earnings signals that could redefine AI and memory-chip prospects. The broader market remains sensitive to policy shifts and funding dynamics in tech, even as the S&P 500 attempts a quarterly rally.

Dive Deeper:

• Nvidia fell 3.7%, Alphabet slipped 1%, and major chipmakers such as Intel, Marvell Technology and Advanced Micro Devices dropped 3.8% to 9%, contributing to a broader sector-wide decline. Memory names Micron Technology and SanDisk tumbled 11% and 12.6%, highlighting renewed pressure in AI-related components after a rally earlier in the year.

• The Philadelphia SE Semiconductor index declined 7.6%, and the S&P 500 tech sector index fell 3.2%, underscoring the tilt away from tech hardware toward cautious positioning amid funding concerns for AI deployments.

• Market momentum showed signs of strain as a heavy, flow-driven rotation cooled; analysts noted that the selloff reflected shifts in sentiment rather than pure fundamentals of the AI narrative, with a wide dispersion of gains and losses across tech names.

• Traders price in a higher probability of a second Federal Reserve rate increase by December, up from expectations of a single 25-basis-point hike, signaling a more restrictive policy stance under new leadership dynamics.

• U.S. manufacturing data indicated a fourth straight month of growth in June, even as factory employment reached a six-year low, while orders reflected anticipation of supply constraints, adding complexity to inflation and rate outlooks.

• Investors monitored the PCE price index, the Fed’s preferred inflation gauge, ahead of an upcoming release, as markets weighed how inflation trends might influence the pace and timing of policy normalization.

• Beyond the domestic market, SpaceX rose about 2% after a sharp decline in prior sessions, illustrating continued uncertainty and the impact of debt markets on high-profile tech bets and fundraising activity.