Global Markets Slide as AI Valuation Concerns Trigger Semiconductor Sell-Off

Major U.S. indices faced significant downward pressure today, with the S&P 500 ($SPX) declining 1.26%, the Dow Jones Industrial Average ($DOWI) dropping 0.30%, and the Nasdaq 100 ($IUXX) plunging 2.69%. Futures markets echoed this sentiment, with September E-mini S&P futures (ESU26) down 1.14% and September E-mini Nasdaq futures (NQU26) falling 2.58%.

The broader market decline saw the S&P 500 hit a 1.5-week low, while the Dow and Nasdaq 100 touched 1-week lows. The slump was primarily driven by growing skepticism regarding the high valuations of chipmakers and memory stocks. As the primary beneficiaries of the artificial intelligence boom, these sectors faced global selling as investors questioned whether projected future returns justify current capital expenditures on AI technology.

The downturn began in Asia, where Japan’s Nikkei Stock Average dropped over 3%. South Korea’s Kospi index suffered an even sharper decline, closing down more than 10% as foreign investors liquidated over $2.5 billion in shares. Heavyweights SK Hynix and Samsung Electronics both fell by more than 12%, triggering forced liquidations for retail traders on margin and accelerating selling in leveraged ETFs tracking the two semiconductor giants.

Despite the volatility, U.S. economic data provided some support. The June S&P manufacturing PMI unexpectedly rose by 0.6 to reach 55.7—the strongest reading in four years and well above the anticipated decline to 54.6. Currently, markets are pricing in a 36% probability of a 25 basis point rate hike at the upcoming FOMC meeting on July 28-29.

International markets remained weak; the Euro Stoxx 50 fell 1.27% to a 1-week low, China’s Shanghai Composite closed down 1.37% from a 1-month high, and Japan’s Nikkei-225 ended the session down 3.55%.

Interest Rates

Safe-haven demand surged amid the equity sell-off, pushing September 10-year T-notes (ZNU6) up 7 ticks, with the yield sliding 2.2 basis points to 4.487%. Gains were further supported by dipping inflation expectations, as the 10-year breakeven inflation rate hit a 6-month low of 2.217%. However, upside was capped by supply pressures ahead of a $69 billion 2-year T-note auction.

European yields also retreated. The 10-year German bund yield fell 3.9 basis points to 2.913%, hitting a 2.5-month low, while the 10-year UK gilt yield declined 4.1 basis points to 4.767%.

In the Eurozone, the June S&P manufacturing PMI dipped 0.3 to 51.3, missing expectations of stability. Conversely, the composite PMI rose 1.0 to 49.5, beating the expected 49.2. Additionally, Eurozone new car registrations grew 3.2% year-over-year to 955,000 units. ECB Chief Economist Philip Lane warned that inflation may remain above target for a considerable period, while swaps indicate a 10% chance of a 25 basis point ECB rate hike on July 23.

US Stock Movers

The semiconductor and AI infrastructure sectors led the market decline. The iShares Semiconductor ETF (SOXX) dropped over 7%. Sandisk (SNDK) fell more than 12% and Micron Technology (MU) dropped over 11%. Other significant losses included ON Semiconductor (ON), Lam Research (LRCX), and Applied Materials (AMAT), all down over 9%. Western Digital (WDC), Qualcomm (QCOM), and KLA Corp (KLAC) fell over 8%, while Marvell Technology (MRVL), Seagate Technology (STX), ARM Holdings (ARM), and Texas Instruments (TXN) dropped more than 7%. AMD, Microchip Technology (MCHP), Analog Devices (ADI), and Intel (INTC) all saw declines exceeding 6%.

Mining stocks also struggled as gold and silver hit 1.5-week lows. Coeur Mining (CDE), Freeport McMoRan (FCX), and Southern Copper (SCCO) each fell over 6%, followed by Hecla Mining (HL) down over 5%, Newmont Corp (NEM) and Barrick Mining (B) down over 4%, and Anglogold Ashanti (AU) down over 3%.

Primoris Services (PRIM) plummeted over 33% after slashing its full-year profit outlook to a range of $2.05 to $2.60, significantly below the previous estimate of $4.80 to $5.00 and consensus estimates of $4.74. Best Buy (BBY) fell over 3% following the announcement that CFO Bilunas will step down in late July.

On the positive side, Edgewell Personal Care Co (EPC) climbed over 13% after rejecting an unsolicited $30-per-share takeover bid from Yellow Wood Partners. CDW Corp (CDW) rose over 5% following a Morgan Stanley upgrade to “overweight” with a $170 price target. IBM climbed over 4% after a JPMorgan Chase upgrade to “overweight” with a $291 target. Avis Budget Group (CAR) rose over 4% after settling a lawsuit with Pentwater Capital Management for $650 million, and Target (TGT) gained over 3% following a Wolfe Research upgrade to “outperform” with a $162 target.

Earnings Reports (6/23/2026)

Upcoming reports include Carnival Corp Ltd (CCL), FedEx Corp (FDX), Hub Group Inc (HUBG), KB Home (KBH), Korn Ferry (KFY), Replimune Group Inc (REPL), Worthington Enterprises Inc (WOR), and XCF Global Inc (SAFX).

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