Suryaa Business Desk: A significant decline has hit the United States stock market, causing major indices to collapse as investors faced widespread panic. The Nasdaq Composite index experienced its worst single-day decline in 18 months. The sell-off in technology and AI-focused stocks resulted in approximately $2.5 trillion in market wealth being erased in a single day.
The market downturn followed reports from major technology companies. Concerns among investors intensified regarding whether the heavy capital expenditure on artificial intelligence and cloud infrastructure by tech firms is generating sufficient short-term revenue. Shares of companies including Microsoft, Meta, Alphabet, and Amazon faced pressure after signaling increased AI spending. Additionally, profit-taking occurred in semiconductor stocks, including Nvidia, due to concerns over high valuations, impacting the 'Magnificent 7' counters.
Market sentiment was further affected by uncertainty regarding Federal Reserve interest rate cuts, with suspicions that rates may not be reduced as quickly as anticipated despite stable U.S. economic growth and employment data. A rise in 10-year U.S. government bond yields created a negative environment for equity markets, particularly for high-valuation tech stocks. The S&P 500 index and the Dow Jones Industrial Average also recorded losses due to selling pressure.
Market experts indicate that the decline on Wall Street is likely to impact Asian, European, and domestic stock markets. Exchanges in Japan and South Korea are already trading with significant losses, and analysts suggest that Indian markets may face short-term volatility due to the potential outflow of foreign institutional investors.
