Technology stocks extended their losses on Thursday, dragged down by a sharp decline in semiconductor shares as investors grew concerned about how companies will finance their enormous artificial intelligence spending plans.
South Korea’s benchmark KOSPI tumbled more than 7 percent, its seventh straight daily decline. The market, which has shed about a fifth of its value over that period, has become a bellwether for the A.I. boom, thanks to its two dominant memory chip makers, Samsung Electronics and SK Hynix.
Shares in other major Asian markets fell sharply, European tech shares wobbled in early trading and U.S. futures pointed to a renewed sell-off. On Wednesday, the S&P 500 recorded its steepest daily decline in months, after data showed U.S. inflation running hotter than economists expected.
Tech stocks are hit hard, again.
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Semiconductor stocks took a beating in Asia. In South Korea, SK Hynix plunged 11 percent and Samsung dropped more than 9 percent. Taiwan’s TSMC slid 2 percent and Japan’s SoftBank, a major investor in A.I., dropped more than 8 percent.
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In Europe, chip makers and related companies suffered steep declines, with ASML, Infineon and STMicroelectronics all losing more than 5 percent in early trading.
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In the United States, futures on the tech-heavy Nasdaq pointed to a 1 percent decline when stocks resume trading in New York. Shares of CoreWeave, a company that sells computing power to big A.I. companies, continued to fall in premarket trading, after heavy losses the day before on its stock and bonds.
Bonds yields fall in choppy trading.
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Amid significant volatility, the yields on U.S. Treasuries fell precipitously, with the 10-year note trading just below 5.1 percent early on Thursday. After the U.S. inflation report’s release on Wednesday, that yield had briefly spiked above 5.3 percent.
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Some analysts attributed the fall in yields, which move inversely to prices, to the turmoil in tech stocks, with investors seeking safety in bonds that offer relatively attractive returns. Before the start of the war in Iran, the 10-year Treasury offered a yield of around 4 percent.
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Traders expect the Federal Reserve to raise the short-term interest rate it controls by a quarter-point in December, but the odds of an increase at the central bank’s meeting this month jumped after the worse-than-expected inflation report. Kevin Warsh, the Fed chairman, will speak at an I.M.F. event in Bangkok on Friday. He will be under pressure to explain why holding off on a rate increase this month is appropriate when price pressure are picking up.
Oil prices retreat.
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The price of Brent crude, the global benchmark for oil, fell more than 2 percent to about $104 a barrel.
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West Texas Intermediate crude, the U.S. benchmark, was trading between $94 and $95 a barrel, down about half a percent.
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The Strait of Hormuz, the vital waterway between Iran and Oman, remains risky for ships to navigate eight months into the war. Attacks near the strait have claimed the lives of at least 25 commercial seafarers. And at more than two dozen have been struck this month alone.
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Last month more oil flowed through the strait to global markets than at any point in the war, in large part because of a U.S. military effort guiding ships. Initial data indicates those flows have largely held up this month.
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Oil exports through the Red Sea, which had become an alternate route to the Persian Gulf used by Saudi Arabia, have been interrupted by the worsening fighting between Saudi forces and the Iranian-backed Houthi militia in Yemen.
Gasoline prices stay high.
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U.S. gas prices remained elevated on Thursday, at a national average of $4.33 a gallon, according to the AAA motor club. The price at the pump has risen by 45 percent since the war began.
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Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
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The average price of diesel went up two cents to $6.32 a gallon on Thursday, up nearly 70 percent since the start of the war. A deal President Trump announced last week to increase Russian fuel exports is aimed at easing diesel prices, but is not clear that Russia could deliver all the fuel promised by the plan. The amount of diesel Russia could supply is small relative to the shortfall in fuel supplies from the Middle East, which have been throttled by the fighting in the region.
What they are saying: “No intention to leave food on the table” in A.I. race.
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As tech market jitters persist, TSMC, the main chip manufacturer for Nvidia’s A.I. chips, said it has no intentions of slowing down.
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After announcing another quarter of blockbuster earnings, C.C. Wei, the company’s chief executive, said: “We are using multiple levers to do everything we can, whenever we can, as fast as we can to maximize the support to our customers. We have no intention to leave food on the table for others. We want to capture every piece of business possible.”
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