Morning Edition · Wednesday, July 29, 2026UpdatedPublished at 7:04 AM EDT · New York

Chip Stocks Lead a Second Day of Global Equity Losses as Markets Await the Fed's Decision

South Korea's KOSPI index was halted for a second day as SK Hynix's profit missed forecasts, and the Federal Reserve held its benchmark rate steady, with gold near 4,036 dollars, silver about 58 dollars and bitcoin near 64,000 dollars.

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Chip Stocks Lead a Second Day of Global Equity Losses as Markets Await the Fed's Decision

Updated at 7:04 AM EDT

The Federal Reserve announced it held rates at 3.5 to 3.75 percent with a hawkish statement, and the KOSPI's two-day drop deepened to more than 18 percent with SK Hynix down about 19 percent.

Asian equities extended a sharp decline on Wednesday, and the selling was concentrated in the semiconductor shares that have driven index gains for two years. Globes reported that South Korea's KOSPI index fell sharply and trading was halted for a second consecutive session, as investors moved out of memory-chip makers SK Hynix and Samsung Electronics. The index dropped as much as 8.2 percent on Wednesday, extending its two-day decline to more than 18 percent, which Benzinga described as the steepest two-day fall on record for the index.

The cause was a corporate result. SK Hynix, one of the largest suppliers of the memory used in artificial-intelligence servers, missed analyst profit expectations while insisting the risk of a memory oversupply remains limited, according to the Financial Times. Its Seoul-listed shares fell about 19 percent. The drop pulled down the broader index and chip suppliers elsewhere in Asia, a pattern that has repeatedly forced emergency trading pauses on the KOSPI this year.

The losses preceded the Federal Reserve's rate decision, delivered at 2 p.m. in Washington. The central bank held its benchmark rate at 3.5 to 3.75 percent for a fifth consecutive meeting, as economists surveyed by FactSet had expected, and adopted a hawkish tone in its policy statement, emphasizing its commitment to bringing down inflation at a moment when the United States-Iran war has pushed up energy prices. Chair Kevin Warsh, who has said the Fed will offer less forward guidance, was due to explain the decision at a press conference. Investors were also waiting on quarterly results from Microsoft and Meta, two of the largest buyers of AI hardware.

Precious metals and bitcoin moved in different directions. Gold traded near 4,036 dollars an ounce and silver near 57.89 dollars, both well below gold's January intraday peak above 5,500 dollars, while bitcoin steadied near 64,400 dollars around the Fed decision.

Part of a tracked trend

AI Trade Derating

Concentration of index gains in a few AI-linked chip and platform stocks makes global equities recurrently vulnerable to sharp, correlated drawdowns whenever investors question the return on AI spending.

What this means

The concentration of index gains in a handful of AI-linked chip stocks means a single earnings miss can force correlated selling across Asian, European and American benchmarks, which is what a repeated KOSPI trading halt signals. Exposed are equity holders positioned in semiconductor and platform names, exporters in Korea and Taiwan whose indices are chip-weighted, and any leveraged position that assumed steady AI capital spending. A Fed that holds while flagging energy-driven inflation keeps real financing conditions tight, which pressures the same richly valued growth stocks through the discount-rate channel.

What to watch

Microsoft and Meta capital-spending guidance, because a cut would confirm the demand doubts behind the memory-chip selloff, while a raise would support suppliers like SK Hynix.
The Fed statement's language on inflation risks from oil, since an explicit tilt toward a later hike would firm the dollar and add pressure to export-heavy Asian equities.

Observations to monitor, not financial advice.

2 sources

Synthesized from: Financial Times · Globes