A wave of selling in US technology giants rattled global markets on Wednesday, dragging major indexes lower and signaling more turbulence ahead.
Futures tied to the Nasdaq 100 slipped 0.3%, extending losses after the index suffered its second-steepest drop since April. Europe’s Stoxx 600 edged down 0.2% after nearing a record high a day earlier, with chipmaker ASML down as much as 1.2%. In Asia, equities fell 0.6%. Meanwhile, the US dollar and Treasury yields were little changed.
Investors are dialing back exposure to big tech names amid concerns that the rally since April has run too far, too fast. Attention now turns to the Federal Reserve’s annual gathering in Jackson Hole, where Chair Jerome Powell is set to speak Friday. Traders are looking for confirmation—or pushback—on expectations of a September rate cut.
“Valuations are stretched, and ahead of Jackson Hole, we’re seeing a mix of caution and profit-taking,” said Anna Wu, cross-asset strategist at VanEck.
In the UK, markets continue to price roughly a 40% chance of a quarter-point rate cut this year despite inflation rising for a second month in July. The pound gained 0.1%.
Treasury traders now see a September cut as virtually certain and expect at least one more before year-end. Powell’s remarks could either reinforce those bets or remind markets that upcoming data may still shift the outlook.
“If the Fed signals stronger support for easing, that would give equities fresh momentum,” said Herald van der Linde, head of APAC equity strategy at HSBC.
Bloomberg strategists warn that Nvidia’s recent slide ahead of its earnings next week is another pressure point. “Given its huge rally since April, Nvidia’s pullback could weigh heavily on global tech stocks in the near term,” noted Mark Cranfield of MLIV.
