Stocks slumped on Wall Street on Tuesday as a sell-off in big technology stocks spread from Asia back to the U.S. over worries about potentially higher interest rates by the end of the year.
The S&P fell 1.4 per cent. The benchmark index is coming off 11 weekly gains out of the last 12, led largely by technology stocks. The Dow Jones Industrial Average, which is less influenced by tech stocks, gave up an early gain and fell just 0.1 per cent by the closing bell. The Nasdaq Composite fell 2.2 per cent.
Canada's main stock index, the TSX/S&P, finished slightly downward by 0.2 per cent.
Markets throughout Asia fell, including a 10 per cent slump for South Korea's KOSPI. Stocks in Europe also slid.
Technology stocks were the biggest weights on the market, especially companies that have seen their values surge amid the frenzy over artificial intelligence technology. Their pricey stock values give them more influence over the broader market's direction.
On Tuesday, more stocks were gaining ground within the S&P 500 than falling, but tech companies were overpowering gains elsewhere.
Micron Technology slumped 13.2 per cent and Nvidia fell 4.1 per cent. Samsung Electronics dropped 12.3 per cent in South Korea.
SpaceX wavered in early trading before closing one per cent higher. The space exploration and AI company had a soaring market debut less than two weeks ago. The company also plans to raise money through a bond offering, partly to fund AI development.
On the oil market, the price for a barrel of Brent crude, the international standard, hovered at about $77 US all day. Prices are still higher from levels of roughly $70 US per barrel before the Iran war began four months ago.
The growing likelihood of interest rate hikes coming this year has helped deflate the massive run-up in AI-related stocks in recent days, as traders worry that the higher rates could hamper economic growth.
Those Big Tech gains have been significant, sending major indexes on record-setting runs throughout 2026. Within the S&P 500, the tech sector alone is up nearly 25.5 per cent just over the last three months and roughly 16.6 per cent for the year. In Asia, South Korea's KOSPI has nearly doubled so far in 2026, even after Tuesday's plunge.
Analysts have been warning that high-flying technology stocks could be due for a downturn.
"Viewed through this lens, a period of consolidation is reasonable, in our view, after such a sharp move higher," Brock Weimer, investment strategy analyst at Edward Jones, wrote in a research note.
Many technology companies have been spending heavily on AI technology. The potential for higher interest rates can stifle future spending and hurt prices for investments.
SpaceX's stratospheric IPO makes Elon Musk world's first trillionaire