Sharp drops in Big Tech companies pull the Nasdaq down 2.2% in early trading

NEW YORK — Stocks slumped on Wall Street 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 one per cent and is coming off 11 weekly gains out of the last 12, led largely by technology stocks. The Dow Jones Industrial Average fell 97 points, or 0.2 per cent as of 9:53 a.m. Eastern. The Nasdaq composite fell 1.5 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.

The growing likelihood of interest rate hikes coming up 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.

Micron Technology slumped 9.4 per cent and Nvidia fell 2.4 per cent. Samsung Electronics slumped 12.3 per cent in South Korea.

SpaceX fell 1.8 per cent in a continued reversal from the space exploration and artificial intelligence company’s soaring stock debut less than two weeks ago. The company also plans to raise money through a bond offering, partly to fund artificial-intelligence development.

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. The U.S. Federal Reserve has signaled that it could raise interest rates at least once before the end of the year. Wall Street is betting on a nearly 90 per cent chance that the central bank will raise its benchmark interest rate.

The yield on the 10-year Treasury fell to 4.48 per cent from 4.51 per cent late Monday. The yield on the 2-year Treasury fell to 4.19 per cent from 4.24 per cent late Monday. Bond yields remain high, though, amid worries about inflation.

Oil prices eased amid negotiations between the U.S. and Iran to end their war. The price for a barrel of U.S. crude fell 1.1 per cent to US$73.07. The price for a barrel of Brent crude, the international standard, fell 1.2 per cent to $76.97.

AP Senior Producer Mayuko Ono in Tokyo contributed to this report.