Stocks that have been big winners in the boom around AI technology led the decline. They’ve been veering up and down this summer on worries that their prices have shot too high and that the strong demand for memory, processors and other building blocks of data centres may fizzle if AI proves less profitable than promised.
Micron Technology dropped 7 per cent, and the seller of computer memory was one of the heaviest weights on the S&P 500. So were chip companies Nvidia, which fell 2.3 per cent, and Broadcom, which sank 3.2 per cent.
Even with their recent swings, such stocks remain big winners, and Micron has more than tripled this year.
Bond yields have been another concern. They have jumped since the war began because high oil prices are pushing inflation higher. That adds to worries over huge debt loads for governments, while surging borrowing keeps yields high.
The yield on the 10-year US Treasury edged down to 4.70 per cent from 4.72 per cent late Monday but remains well above its 3.97 per cent level from just before the war with Iran began. The 30-year Treasury yield also ticked lower but is still near its highest level since 2007.
When bond yields are high, investors are less willing to pay high prices for stocks and other kinds of investments, particularly those seen as the most expensive.
High yields have already sent the average long-term US mortgage rate near its highest level in a year, which has hurt the housing industry. A report on Tuesday said homebuilders broke ground on fewer new houses last month than economists expected.
High yields could also slow borrowing by Big Tech companies to pay for data centres, threatening a big source of growth for the US economy.
In other dealings early Wednesday, the US dollar fell to 159.37 Japanese yen from 159.59 yen. The euro rose to USD 1.1582 from USD 1.1574. (PTI)
