Global markets experienced a cascade of selling on Tuesday as investors grew uneasy with elevated technology stock valuations and bubble-like conditions. South Korea's Kospi index plummeted by 10%, Nasdaq futures dropped over 2%, and the sell-off in global tech shares accelerated. Despite oil prices falling 16% this month, investors still anticipate the Federal Reserve will take more aggressive measures to combat inflation.

As of the latest update, Dow futures are down 0.39%, S&P 500 futures have fallen 1.22%, and Nasdaq futures have declined by 2.59%.

The Stoxx Europe 600 index fell by 1%. Both technology and basic resource stocks were among the worst-performing sectors, each dropping at least 2.5%.

The South Korean Kospi index plunged 10%.

European market declines were more modest compared to other global indices, which were hit hard by a slump in chipmakers.

The Asian tech stock index fell sharply, ending an eight-day winning streak. The South Korean Kospi index dropped over 8%, triggering a circuit breaker that paused trading for 20 minutes, the fourth such occurrence this year.

Local media reported that SK Hynix is slowing its expansion of AI memory chip capacity and shifting focus to lower-priced commodity DRAM products.

Shares of both SK Hynix and Samsung Electronics plunged over 10%. The sharp decline in South Korea's leading chip stocks signals that investors are quickly locking in recent gains, which may also serve as a warning sign for U.S. tech shares.

In Japan, the Nikkei 225 closed down 3.55%. Technology conglomerate SoftBank Group and chipmaker Kioxia led the declines, falling over 15% and 10% respectively. China's Shanghai Composite Index fell 1.4%, and Hong Kong's Hang Seng Index declined 1.7%.

The bullish sentiment surrounding technology stocks has weakened.

U.S. stock index futures fell sharply as the tech sell-off gained momentum. Futures for the tech-heavy Nasdaq 100 index plunged 2.5%, positioning the index to extend Monday's significant losses. S&P 500 futures fell 1.2%, and Dow Jones Industrial Average futures declined 0.4%.

Memory chip stocks were among the hardest hit, with many having seen triple-digit gains year-to-date. SpaceX also appeared poised to fall below its $150 opening price from its market debut.

In U.S. pre-market trading, Intel and Micron Technology led the broader chipmaker sector lower, while SpaceX fell 4.5%.

Chris Weston, Head of Research at Pepperstone Group in Melbourne, stated, "These markets are certainly not dull. The previous market leaders appear to have lost momentum, and investors are rotating into other, more defensive areas that are less reliant on the AI theme and have more predictable cash flows."

During the previous U.S. trading session, sentiment toward high-flying tech stocks had already soured, with SpaceX's stock falling. The market's focus shifted to memory chipmaker Micron Technology's quarterly earnings report due Wednesday, a stock that has surged over 300% since January.

Jian Shi Cortesi, a Fund Manager at Gam Investment Management, noted, "Many investors have substantial profits in AI stocks, and any unease could prompt them to cut positions to lock in gains. Currently, tech stocks are also particularly sensitive to interest rate outlooks and potential Fed rate hikes."

On Tuesday, chipmakers faced heavy selling pressure. These companies were previously among the biggest beneficiaries of the artificial intelligence trade.

Just the day before, hyperscale cloud providers like Alphabet also saw a pullback as investors began questioning whether future returns justified current expenditures.

Marija Veitmane, Head of Equity Research at State Street Markets, commented, "Since the start of the Iran war, technology was the only sector institutions were adding to, so some volatility and profit-taking is not surprising."

Oil prices have nearly returned to pre-war levels.

Meanwhile, Brent crude fell for a second consecutive day, dropping below $76 per barrel for the first time since early March, and is currently down 0.6% at $77.40.

As the number of vessels transiting the Strait of Hormuz continues to increase, physical market oil prices have almost returned to pre-conflict levels.

Traders found some comfort in hopeful initial signs from U.S.-Iran negotiations for a permanent agreement, with the U.S. granting Tehran a 60-day license to sell oil on international markets.

Analysts at Saxo Bank said, "This move should help export some of the roughly 30 million barrels of crude that left Iranian ports last week. Meanwhile, shipping data shows millions of barrels of crude and refined products passed through the Strait of Hormuz over the weekend, reinforcing market expectations of improved regional supply flows."

Rising U.S. Treasury yields are impacting risk assets.

Typically, falling oil prices boost stock markets, but investors are currently more focused on how the earlier surge in energy prices will affect central bank policy, particularly the Fed's. The new Chair, Kevin Warsh, appears set to take a tougher stance on inflation.

U.S. Treasuries found some support as weaker crude prices prompted traders to reduce bets on Fed rate hikes for this year and next.

However, the yield on the inflation- and rate-expectation-sensitive 2-year U.S. Treasury note earlier climbed to a 16-month high, trading around 4.188%, with longer-dated bond yields also rising significantly.

Lee Hardman, FX Strategist at MUFG Bank, stated, "The repricing higher in U.S. yields is creating a more challenging short-term environment for risk assets, especially after the significant gains of recent months."

Money markets indicate investors are close to fully pricing in a Fed rate hike by September.

Against this backdrop, the U.S. dollar rose to a one-year high against a basket of currencies.

Benoit Peloille, Chief Investment Officer at Natixis Wealth Management, noted that rising interest rates over the past week, following Kevin Warsh's first meeting as Fed Chair, provide important context for recent volatility in the tech sector.

Peloille said, "The market believes Kevin Warsh will take inflation pressures seriously and bring inflation back near target, and tech stocks, as a long-duration sector, are bearing the brunt. Each rate hike acts like a liquidity withdrawal."

The Japanese yen is approaching intervention levels.

In currency markets, much of the dollar's strength comes from yen weakness. On Tuesday, the yen was flat against the dollar at 161.47, having approached a 40-year low the previous day after volatile trading.

Japanese Finance Minister Tsuyoshi Katayama said on Tuesday she held an online meeting the previous day with U.S. Treasury Secretary Scott Bessent to discuss global financial markets. Analysts said this hints at rising risks of Tokyo intervening to support the yen.

Meanwhile, on the 10th anniversary of the Brexit referendum, the British pound fell 0.3% to $1.3215.

The pound was pressured after UK Prime Minister Keir Starmer said on Monday he would resign, paving the way for an orderly transition of power expected to be taken over by Andy Burnham.

Gold, silver, and bitcoin fell sharply.

Prices for gold, silver, and copper declined. Gold, pressured by rising expectations for U.S. rate hikes this year, fell 2% to below $4,100.

Investors are weighing U.S.-Iran peace talks and U.S. monetary policy prospects. The increased market expectation for Fed rate hikes has overshadowed signs of progress in U.S.-Iran negotiations.

In the cryptocurrency market, bitcoin fell 3.1%, dropping below $63,000; Ethereum fell nearly 5% to $1,650.

Bitcoin struggled to break out of its recent narrow range amid mixed signals from U.S.-Iran talks on ending the war. Although bitcoin has rebounded slightly from its 20-month low of $59,125 hit on June 5, two-way volatility remains limited. The bitcoin price has halved from its record high of $126,223 reached in October 2025.

Wall Street gold bulls are collectively scaling back their forecasts! Following Goldman Sachs, Deutsche Bank has cut its target price by up to 32%.

As investors grow more cautious about the U.S. monetary policy outlook and gold investment demand remains persistently weak, international investment banks have recently initiated a new wave of downgrades to gold price forecasts.

After Goldman Sachs slashed its gold price target last week, Deutsche Bank significantly cut its gold price forecast by up to 32% in its latest report. According to a report by the bank's research analyst Michael Hsueh, the Q3 gold price forecast was lowered by over one-fifth to $4,300 per ounce, and the Q4 target price was cut by 17% to $4,800.

Although both revised targets remain above the current level of around $4,140, implying the bank still expects gold to rise from its current position, the bullish conviction has "weakened significantly."

Hsueh explicitly stated in the report that the two core factors driving gold lower are: the repricing of the Fed's policy path and the resilience shown by U.S. macroeconomic data. Hsueh further warned that if the Fed hikes rates three or four times, gold could fall to around $3,800 per ounce—implying a potential drop of up to 32% from the historical high of $5,600 at the end of January.

Morgan Stanley warns! Two factors could trigger a sharp drop in U.S. stocks.

Investors are searching for signals to determine if the AI-driven rally still has momentum. Morgan Stanley believes that, facing liquidity tightening from expectations of Fed balance sheet reduction combined with a peak in the pace of upward earnings revisions, the stock market is set for significant volatility.

The Morgan Stanley strategy team led by star analyst Mike Wilson argues, "Considering all factors, market liquidity has essentially entered a tightening phase. Unless there is a run on money market funds, a sharp spike in Treasury volatility, or a liquidity break in credit markets, this liquidity tightening trend will be difficult to reverse. In other words, the biggest near-term risk for U.S. stocks comes from liquidity contraction, not the inflation-fighting Fed rate hikes the market fears."

While liquidity continues to recede, the recent pace of upward revisions to future corporate earnings by institutions has also peaked and begun to decline.

Morgan Stanley warns that the market may test Warsh's policy commitment of "enduring short-term pain for long-term economic stability" in the coming weeks. This suggests U.S. stocks are about to face a major test, and the Fed is unlikely to step in to support the market.

JPMorgan bucks the trend, raising its S&P 500 target to 8,900 points, citing solid fundamentals that can withstand Fed rate hike impacts.

Before Monday's Nasdaq plunge and Tuesday's global market decline, Stephen Parker, Co-Head of Global Investment Strategy at J.P. Morgan Private Bank, stated that this year's stock market gains have been entirely driven by earnings growth, with even the most optimistic expectations repeatedly exceeded.

In an interview, Parker outlined a base case year-end target of 7,800 for the S&P 500. He also stated that if current valuation multiples remain stable and earnings momentum persists, an optimistic target of 8,900 is "not out of reach." The key to achieving these higher targets lies in broad-based earnings strength across industries.

Parker noted that among the 11 sectors of the S&P 500, eight are expected to achieve double-digit earnings growth.

Notable individual stock movements.

Amid the collective tech sector sell-off, legacy tech stock IBM bucked the trend and rose. After JPMorgan upgraded its stock rating to "Overweight," IBM shares gained over 4%. The bank's analysts stated, "The software business continues to deliver higher-quality recurring revenue for the company, while also pushing up gross margins, earnings levels, and cash flow performance."

AMC Entertainment Holdings stock plunged 21%. The company previously announced it had signed definitive agreements with several institutional investors to sell 95.3 million shares of AMC common stock, aiming to raise approximately $200 million. The stock closed at $2.76 the previous trading day.

Qualcomm is in advanced talks to acquire AI software infrastructure company Modular in a deal valued around $4 billion. The semiconductor company's stock fell 6% on the news.

Oracle was not spared in the global tech stock rout. The software giant disclosed in a regulatory filing that it has laid off 21,000 employees over the past year, representing nearly 13% of its total workforce. Its stock fell 2% after the announcement.

Energy Fuels announced it has signed a definitive agreement to acquire high-end magnetic materials company VAC. The company's stock fell slightly, down nearly 1% on the news.

Professional engineering and construction services provider Primoris Services stock plummeted 36%. The company lowered its earnings guidance due to additional cost overruns and project delays in renewable energy projects, and its Chief Operating Officer announced his departure.

Private equity firm Yellow Wood Partners made an unsolicited offer to acquire consumer products company Edgewell Personal Care for $30 per share, which was rejected by the board as undervaluing the company. The company's stock surged over 9% on the news.

Vehicle rental and mobility services company Avis Budget Group disclosed in an announcement that it has reached a $650 million cash settlement agreement with Pentwater Capital. The company's stock rose nearly 6% as a result.