Global markets retreat as AI valuation concerns trigger tech sell-off
The S&P 500 dropped 1.26 per cent and the Nasdaq 100 fell 2.69 per cent on 23 June 2026 as investors questioned whether artificial intelligence spending can justify current valuations.
Global equity markets experienced a sharp retreat on 23 June 2026, driven by a broad sell-off in chipmakers and memory stock producers amid growing concerns over high valuations in the artificial intelligence sector. The S&P 500 Index dropped 1.26 per cent, the Dow Jones Industrial Average fell 0.30 per cent, and the Nasdaq 100 Index declined 2.69 per cent, with the tech-heavy index posting a one-week low.
The sell-off began in Asia, where South Korea’s Kospi index closed down more than 10 per cent. Foreign investors offloaded more than $2.5 billion of Kospi shares, while SK Hynix and Samsung Electronics each fell more than 12 per cent. The steep declines triggered forced liquidations for retail investors trading on margin, a situation compounded by a wave of selling tied to leveraged exchange-traded funds tracking the two chip giants. Japan’s Nikkei Stock Average also fell more than 3 per cent.
In the United States, Sandisk led losses in the S&P 500 and Nasdaq 100, falling more than 12 per cent. Micron Technology dropped more than 11 per cent, while ON Semiconductor, Lam Research, and Applied Materials all fell more than 9 per cent. The iShares Semiconductor ETF plunged more than 7 per cent as investors questioned whether future returns can justify current spending on artificial intelligence infrastructure.
Conversely, US Treasury yields fell as investors sought safe-haven assets. The 10-year T-note yield dropped 2.2 basis points to 4.487 per cent, supported by easing inflation expectations with the 10-year breakeven inflation rate falling to a six-month low of 2.217 per cent. European government bond yields also moved lower, with the 10-year German bund yield dropping to a 2.5-month low of 2.905 per cent.
Despite the equity turmoil, some US economic data proved supportive. The June S&P manufacturing PMI unexpectedly rose 0.6 points to 55.7, marking the strongest figure in four years. Meanwhile, the markets are discounting a 36 per cent chance of a 25 basis point rate hike at the next Federal Open Market Committee meeting on 28 and 29 July.
