By Martin Baccardax
Stocks could be facing the end-of-quarter reckoning many investors feared when Elon Musk's SpaceX unveiled plans for its multibillion-dollar initial public offering and Federal Reserve Chairman Kevin Warsh took over the central bank's policy reigns earlier this month.
The early signs of a late June "tech wreck" started to formulate Monday, with Google parent Alphabet shedding more than $225 billion in market value, its biggest slump in more than a year, and SpaceX extending its three-day decline to more than $600 billion. Shares in SpaceX were falling 4.3% in premarket trading Tuesday, putting them below $150 a share.
Those losses were paired with a notable move higher in Treasury bond yields, tied in part to last week's debut press conference from the new Fed chairman, who laid out plans to scrap forward guidance on interest rates, overhaul the Fed's communications policy, and switch the central bank's inflation focus to a version calculated by the Dallas Fed.
"Yields are becoming a headwind as markets price in more Fed hikes between now and the end of the year," said Fundstrat's Tom Lee.
Overnight, South Korea's Kospi index, dominated by two of the world's biggest chip makers, tumbled the most in more than three months, with circuit breakers halting trading late in the session.
SK Hynix, which overtook Samsung as the market's biggest stock this week, tumbled 12.5%, while Samsung fell 13.2%. Japan's Nikkei 225 also shed more than 3.5%, with tech leading the declines, as the yen neared its weakest level in four decades.
The collective action has the Nasdaq Composite facing a big slump of around 700 points, or 2.3%, on Tuesday with the S&P 500 poised to shed around 85 points and fall to the lowest levels since June 10.
Some of the market's biggest tech stocks are in significant one-year drawdowns heading into the Tuesday session, with Microsoft and Meta Platforms down 30% over the past year, and Oracle, the world's biggest hyperscaler outside of the Magnificent Seven, down nearly 50%.
Chip stocks might be the larger near-term concern, however, given the massive 92% surge for the PHLX Semiconductor index since the start of the third quarter, and the gains this year for Micron Technology, Intel, Advanced Micro Devices, and Marvell Technology.
Marvell was added to the S&P 500 this week alongside data-center supplier Flex, as old school company's Pool Corp and Campbell's were shown the door.
Blake Anderson, director of portfolio management at Carson Group, said the message of the move is "difficult to miss."
"Today's market leadership and relative stock returns are increasingly tied to the digital infrastructure powering artificial intelligence, and less so to the once dominant consumer," Anderson said.
That truism also highlights the market's shifting volatility, in that big intraday moves are both harder to track and far less visible in broader macroeconomic data.
Suggestions that Tuesday's selloff is tied to concerns over AI spending from the hyperscalers and stretched valuations in the chip sector could be true, but those conditions also were valid this time last month, when stocks were still powering higher and both the S&P 500 and the Nasdaq Composite were nearing the all-time highs they reached in the first days of June.
The difference this time, as the end of a successful quarter approaches and major concerns tied to Fed policy, the fragile U.S.-Iran peace talks, and an uncertain economic backdrop continue to build, will be how markets react.
"Investors increasingly recognize the crowding and 'same bus' dynamic," said UBS's head of European equity strategy, Gerry Fowler. "And many are beginning to question how much upside remains versus risk."
Write to Martin Baccardax at martin.baccardax@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 23, 2026 06:49 ET (10:49 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments