Technology Selloff Spreads Across Global Markets as SpaceX Rally Reverses

A selloff that began on United States markets broadened on Tuesday into a wide decline in technology shares around the world, according to the Financial Times. The newspaper reported that falling prices on United States exchanges spread to Europe and Asia as SpaceX shares, which had risen sharply, turned lower.

The pressure was heaviest in memory chips. In South Korea, shares of SK Hynix and Samsung Electronics each fell more than 12 percent, pulling the Kospi index down about 10 percent, according to TheStreet. On Wall Street the Nasdaq Composite closed down about 2 percent and the S&P 500 lost 1.3 percent, while the Dow Jones Industrial Average rose 0.1 percent. A research note from Bank of America that warned of up to three United States interest-rate increases this year added to the selling, Yahoo Finance reported.

SpaceX, which listed publicly on June 12 and briefly became one of the world's most valuable companies, fell about 16 percent on Monday, a third straight day of losses that erased roughly 400 billion dollars in value. On Tuesday the stock fell below its 150-dollar debut price during the session before recovering to close nearly 1 percent higher, ending a three-day decline of about 24 percent, according to Al Jazeera. The Israeli financial outlet Globes had reported that the Seoul exchange fell roughly 10 percent, that Nasdaq futures were down more than 2 percent and that Brent crude traded near 76 to 77 dollars a barrel. Selling in SpaceX had accelerated after the company announced an inaugural bond offering of about 20 billion dollars, intended in large part to fund its artificial-intelligence plans, on top of the roughly 85 billion dollars it raised in its public offering.

Analysts cited by Globes attributed the declines to profit-taking, concern that artificial-intelligence shares had become too expensive, and caution before new United States inflation figures and an earnings report from the memory-chip maker Micron Technology. One analyst said the episode was a reminder that the semiconductor business remains cyclical and opportunistic. Oracle's decision to cut about 21,000 jobs over the year, some of them to fund artificial-intelligence investment, added to the concern.

The decline follows a stronger United States labor report earlier this month. That report raised Treasury yields and renewed expectations that the Federal Reserve, under its new chair Kevin Warsh, may move toward raising interest rates rather than cutting them. From a sound-money perspective, the reversal shows how years of low-cost credit financed concentrated investment in a single industry, and how quickly those valuations can fall once investors expect the cost of borrowing to rise.