Key facts
- US technology stocks are poised for a rebound after a significant selloff.
- Nearly $1.3 trillion in market capitalization was lost from Nasdaq 100 stocks over two days.
- Concerns over artificial intelligence valuations are cited as the primary driver of the selloff.
- Contracts on the Nasdaq 100 index rose 0.6% in pre-market trading.
- Semiconductor stocks, including Nvidia and Micron, were major contributors to the market's decline.
US technology stocks were poised for a rebound on Wednesday, following a significant selloff that erased nearly $1.3 trillion from the market capitalization of Nasdaq 100 companies over two days. Concerns surrounding the valuations of artificial intelligence-related stocks fueled the decline.
Contracts on the Nasdaq 100 index gained 0.6% by early trading in New York, recovering from a 3.3% slump in the prior session. S&P 500 futures also showed a slight increase of about 0.2%.
On Tuesday, the S&P 500 opened 1.3% lower, with semiconductor manufacturers Nvidia Corp. and Micron Technology Inc. among the largest contributors to the index's decline. The tech-heavy Nasdaq 100 fell 2.9%, while the Dow Jones Industrial Average slipped 0.4%. The CBOE Volatility index, a measure of market fear, surged above 20.
The broader market downturn was exacerbated by a sharp selloff in Asian chipmakers, including a 10% drop in South Korea's Kospi index. This decline stoked concerns about the sustainability of the artificial intelligence-driven rally and broader market valuations, according to Tom Essaye, founder of the Sevens Report.