A sell-off in chipmakers led to a plunge in major U.S. indices
Photo: X / NYSE
The Nasdaq Composite Index plummeted 1.8% at the opening bell on July 17: a global sell-off in chipmakers’ stocks spilled over into the U.S. market. Investors are rushing to take profits on stocks that have driven this year’s market rally but whose valuations now appear too high, Bloomberg explains.
An exchange-traded fund that tracks the stocks of semiconductor companies fell by more than 4%.
The S&P 500 broad-market index fell 1.2%, while the Dow Jones Industrial Average fell 1%.
Nvidia shares fell 3.4%, leading the decline among the "Magnificent Seven" companies. Intel’s market capitalization plummeted by 6.2%. Shares of chip equipment manufacturers, as well as companies in the optical technology and energy sectors, fell sharply.
On Thursday morning, a wave of selling swept across Asia: Taiwan’s stock market entered a technical correction, and the region’s main index fell to a two-month low. In Europe, the decline was less pronounced, as the technology sector accounts for a smaller share of the market there, the agency notes.
The release of a new, powerful model by the Chinese AI startup Moonshot dealt an additional blow to the market. The company stated that the model is comparable in capabilities to the best models from OpenAI and Anthropic PBC. If alternative AI models become widely adopted, this could reduce the need for U.S. tech companies to make large-scale chip purchases, according to Bloomberg.
What Analysts Are Saying
“When panic sets in, no one wants to be the last one to sell in a falling market, so the pressure only intensifies,” explains Guillermo Hernández Sampere, head of trading at MPPM. According to him, with the start of earnings season, fears regarding overvalued companies have been confirmed. In addition, investor sentiment has deteriorated due to new attacks in the Middle East.
Francisco Simón, Head of Strategy for Santander Asset Management in Europe, described the current sell-off as moderate so far. “From a fundamental perspective, the picture remains positive: corporate earnings growth this year has been exceptional, and quarterly results continue to be solid,” he said. “If companies continue to report strong results and their stock valuations become more attractive following the pullback, this could bring long-term investors back to the market.” Simón believes that cash will offer the best protection in the near term. Bonds, in his view, are a less attractive option, as rising oil prices could weaken the protective qualities of government debt securities.
This news story is being updated.
This article was AI-translated and verified by a human editor
