US semiconductor stocks experienced significant selling pressure on Tuesday, September 1, with major chipmakers falling over 3% before market open. SanDisk led the decline, dropping 3.24% to $1,566.7, followed by Intel, down 2.45% at $89.51. SK Hynix and Micron dropped 2.06% each to $164.58 and $958.73 respectively, while AMD slipped 1.73% to $470.72 and Nvidia fell 1.49% to $220.78. The decline came as US equity futures, including Dow and S&P 500, dropped about 0.5% amid continued market pressure on the semiconductor sector.
The semiconductor decline coincided with broader market weakness as Dow Jones Industrial Average futures dropped 240 points, or 0.5%, while S&P 500 futures fell 0.5% and Nasdaq-100 futures were in red too, slipping nearly 1%. According to market reports, the pressure stems from rising oil prices, higher global bond yields and renewed US-Iran tensions. This represents a significant shift from the previous session when semiconductor stocks had demonstrated resilience against broader market weakness, with investors continuing to favor artificial intelligence-linked stocks.
Fed Chair Kevin Warsh's debut Jackson Hole speech proved far more consequential than anticipated, reaffirming the central bank's inflation fight with hawkish rhetoric. Warsh declared the 2% inflation target "firm and fixed," stating that inflation at 3.7% has not shown signs of "meaningfully improved" underlying trends. The speech sent two-year Treasury yields surging 12 basis points to 4.35% - the largest Jackson Hole move since at least 2010 - with swap markets now showing a greater than 50% probability of a quarter-point hike at the September 16 meeting. As reported by MPC Markets, Barclays now forecasts rate hikes in both September and December, a stark contrast to their previous forecast of no increases this year. Over the weekend, traders lifted their bets that the Fed would raise rates by 25 basis points at its next meeting to 62%, up from roughly 40% a week ago following Warsh's speech.
Market experts identify two primary factors driving the current chip stock decline. According to Harshal Dasani, Business Head at INVasset PMS, "A hot labour print and sticky inflation have pushed traders to price rate hikes rather than cuts this year, and long-duration growth assets carry the entire adjustment when the terminal rate moves up." Additionally, chip stocks are facing pressure from competitive and supply-side concerns, including rising Chinese memory-chip capacity that could increase supply and weigh on prices and margins. As Dasani noted, "This is a de-rating, not a demand break, so the relevant test is hyperscaler capital expenditure guidance, not the daily tape."
Despite the current decline, technology stocks have remained among the strongest performers this month, with artificial intelligence-linked companies leading the gains. According to NDTV Profit, the S&P 500 technology sector has risen nearly 6% in August. Nvidia has gained more than 7%, while Microsoft and Micron Technology have advanced around 9% and 14%, respectively. The broader market has also posted strong monthly gains, with the Dow up more than 1% month-to-date and on track for its fifth consecutive monthly advance. However, recent developments show Nvidia fell 4.6% on profit-taking after its blockbuster $96.2 billion quarterly revenue (+106% year-on-year) and roughly 70% growth guidance.
