Dow falls 200 points as tech selloff deepens and chip stocks extend retreat

• Major chip stocks declined sharply: AMD and Intel each fell over 3.5%, Nvidia dropped 1.7%, and Micron sold off despite beating earnings expectations
• US inflation climbed above 4% in May driven by higher energy prices, with traders now pricing in one 25-basis-point rate hike and a 27% chance of another before year-end
• The tech selloff spread globally with South Korea's Kospi falling 5.81%, Japan's Nikkei down 4.15%, and European Stoxx 600 declining 1%

Market Summary

Market Performance:

US stocks declined Friday with the Dow Jones down 207 points, S&P 500 falling 0.61%, and Nasdaq dropping 0.95%. The selloff was driven by continued rotation out of technology stocks, particularly semiconductors.

Key Sector & Companies:

Chip stocks led declines despite strong earnings. Micron fell 5.6% after reporting better-than-expected results. Advanced Micro Devices and Intel each dropped over 3.5%, while Nvidia declined 1.7%. Oracle lost 0.38%, and Microsoft fell on Xbox price increases. Apple bucked the trend, rising 0.7%.

Major Corporate Action:

ON Semiconductor agreed to acquire Synaptics in an all-stock deal valued at approximately $7 billion. Synaptics fell 0.95%, while ON Semiconductor dropped 19%.

Market Drivers:

Investors are questioning the sustainability of heavy AI infrastructure spending and elevated tech valuations. A New York Times report that OpenAI may delay its IPO until next year heightened concerns about AI capital market funding. JPMorgan noted worries about "sustainability of infrastructure spending given the delay in funding."

Inflation & Monetary Policy:

US inflation climbed above 4% in May—the first time in three years—driven by higher energy prices. Traders are pricing in one 25-basis-point rate increase with a 27% probability of another hike before year-end.

Global Impact:

The tech selloff spread internationally. SoftBank Group declined as an OpenAI backer. South Korea's Kospi dropped 5.81%, Japan's Nikkei fell 4.15%, and Europe's Stoxx 600 lost 1%.

Outlook:

Rising memory costs and AI spending sustainability concerns continue pressuring tech valuations amid an uncertain rate environment.