The traded lower on Thursday, 2 July, as technology stocks resumed their losing streak amid growing concerns that the blistering rally in artificial intelligence (AI)-linked shares this year may have run too far, too fast.
Investors also remained cautious ahead of key US employment data, which could influence the Federal Reserve’s monetary policy outlook.
Futures tied to the Nasdaq 100 fell 0.8%, while S&P 500 futures slipped 0.2%. In contrast, futures linked to the Dow Jones Industrial Average edged 0.2% higher.
In Asian trading, shares of SK Hynix Inc. and Samsung Electronics Co each plunged more than 8% in Seoul, while Kioxia Holdings Corp tumbled 14% in Japan after a blistering rally that had driven the stock up more than 650% so far this year.
The weakness followed a negative session on Wall Street, where the major US indices ended lower. The Dow Jones Industrial Average erased an intraday gain of 423.46 points, which had briefly pushed it to a record high, before closing marginally lower.
The S&P 500 and Nasdaq Composite declined 0.2% and 0.7%, respectively, as investors pared exposure to semiconductor stocks.
After aggressively increasing exposure to chip and memory stocks during the first half of 2026—some of which delivered gains of as much as 300%—investors are now reassessing valuations and the sustainability of the AI-driven rally.
While the sell-off in semiconductor stocks continued to weigh on broader market sentiment, investors drew some comfort from comments by and other central bankers, who suggested that inflation risks have become more balanced.
Speaking at the European Central Bank’s annual forum in Sintra, Portugal, Warsh said inflation expectations had moderated over the past month. He also reiterated the Fed’s commitment to restoring price stability, reinforcing expectations that policymakers are in no hurry to raise interest rates.
Attention now turns to the US nonfarm payrolls report due later on Thursday for fresh clues on the Federal Reserve’s policy outlook after Warsh’s remarks dampened expectations of a July rate hike.
“A stronger-than-expected report would reinforce the view that the US economy remains resilient. However, a softer reading could further reduce expectations of tighter monetary policy, potentially providing relief for growth stocks that have struggled over the past week,” said domestic brokerage firm Vested Finance.
Crude prices remain under pressure
traded near a four-month low as traffic through the Strait of Hormuz continued to recover, easing concerns over supply disruptions. Brent crude slipped below $71 a barrel, trading at its lowest level since the week before the Iran war began in late February, while West Texas Intermediate (WTI) fell below $68 a barrel.
Higher production from major Middle East oil producers, coupled with a sharp increase in following the lifting of the US naval blockade, has strengthened expectations that global oil supply will outpace demand. A US official said crude flows through the strategic waterway had exceeded 10 million barrels per day.
Meanwhile, Saudi Arabia has made the unusual move of selling millions of barrels of crude on an ad hoc basis to customers in Asia as it resumes shipping oil from terminals inside the Persian Gulf, Bloomberg reported.
Brent crude futures ended the second quarter of 2026 with a 40% decline, marking their worst quarterly performance since the pandemic-driven collapse in 2020.
(With inputs from Bloomberg)
Disclaimer: We advise investors to check with certified experts before making any investment decisions.