Chipmakers' stocks have plummeted amid a bond sell-off
Shares of chipmakers fell in premarket trading on Tuesday, August 18, amid a bond sell-off: Treasury yields reached multi-year highs, according to MarketWatch. Shares of Micron Technology, Marvell Technology, and Intel fell 4–5.5% in premarket trading on August 18, while Nvidia shares dropped nearly 2%.
Movements in technology stocks affected Nasdaq 100 futures: they fell by more than 1%, while S&P 500 futures lost 0.4% and Dow Jones futures lost 0.1%.
Shares of Oracle, a major player in the AI cloud computing market, fell 2.7%, while those of AI developer Palantir dropped 0.6%.
What's the matter?
The yield on 30-year U.S. Treasury bonds rose to nearly 5.34% on Tuesday, hitting a high not seen since 2007. A similar trend has swept through the markets of other developed countries: in France, borrowing costs reached their highest level since 2008; German bonds returned to 2011 levels; British bonds are approaching 6%; and long-term Japanese bonds are near all-time highs.
The current sell-off in the debt market is driven by a combination of global factors, notes Bloomberg. Geopolitical tensions are disrupting global supply chains, which is constantly pushing prices higher. In addition, investors are spooked by bloated government spending: because governments are spending too much, central banks are forced to keep interest rates high for longer, making loans expensive for the entire economy.
"This is a more unfavorable trend for risky assets, as it tightens financial conditions even without the Fed actively raising rates," MarketWatch quotes Patrick Mannelli, market strategist at Tickmill Group, as saying.
"The combination of high oil prices and rising cost of capital is most detrimental to 'growth' companies that are nearing overbought territory," noted Mikhail Denislamov, deputy director of Capital Markets Research at Freedom Broker.
This article was AI-translated and verified by a human editor
