Nasdaq 100 Falls 2% in Chip-Led Rout as Oil Climbs: Markets Wrap

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July 7, 2026 - 17:03

5 minutes

(Bloomberg) — A selloff in chipmakers dragged down the stock market on concerns over whether massive artificial-intelligence investments will justify lofty valuations after a breakneck surge from war-driven lows.Wall Street’s best-performing corner this year was pummeled, with a gauge of semiconductor firms sinking 6%. Not even Samsung Electronics Co.’s record profit was enough to entice investors. The Nasdaq 100 fell 2%. SpaceX joined the index. Despite weakness in tech, most companies in the S&P 500 rose, signaling rotation into other sectors. Higher oil prices lifted bond yields.Chipmakers hit record highs this year, but have hit turbulence on fears about increased competition, possible overcapacity and whether plans for billions of dollars in investment will pay off. Worries are rising that positioning is becoming excessive while a surge from late March has run too far.“While we remain confident in AI’s growth story and continue to see attractive opportunities in semis and hardware, we have also highlighted that the next leg of equity gains is likely to be marked by a broadening of market leadership,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office. “Investors should ensure diversified exposure across sectors and regions.”Traders also kept a close eye on geopolitical developments, with US crude hitting $70 after attacks on shipping in and around the Strait of Hormuz. Higher energy costs could delay the Federal Reserve’s plan to bring inflation back to its target especially if peace talks stall. Treasury 10-year yields climbed to 4.5%.“The issue of rotation between different sectors is a popular one right now, but the rotation within the tech sector could be the most important one to keep an eye on,” said Matt Maley at Miller Tabak. “If it can continue, the bulls will remain in charge.”While the rally has “flattened out” over the past four to six weeks, that could be seen as merely a “breather” after the extremely strong run the market saw in April and May, he added.While earnings season kicks off next week with big banks, the flare-up in skepticism around the tech outlook will be front and center throughout reporting period. The big risk is that technology companies, especially the hyperscalers, won’t beat analysts’ overly optimistic earnings growth estimates for the quarter, according to veteran strategist Ed Yardeni.“That could cause a correction among technology stocks,” he said. “The overall stock market might dodge a correction if investors rotate into sectors that have lagged and report better-than-expected earnings. We are in the rotation camp for the stock market’s outlook up ahead.”Corporate Highlights:Amazon.com Inc. is looking to raise at least $25 billion from a US dollar bond sale, marking its latest jumbo debt offering as the tech giant ramps up spending on artificial-intelligence infrastructure. China’s DeepSeek is developing its own chip to help power artificial-intelligence systems, Reuters reported, citing unnamed sources. Rivian Automotive Inc.’s stock tumbled after the electric-vehicle maker said it will sell 75 million shares to fund equity contributions related to a US Department of Energy loan. Fiserv Inc. climbed after a report that several US banks have explored a potential deal for a debit network owned by the financial technology firm. What Bloomberg strategists say…“It’s premature to say whether this is ‘the big one’, ie a major structural reversal in the AI trade. It does seem fair, though, to say that the era of the ‘easy’ AI trade — the one with the smooth parabolic rally — is indeed in the rearview mirror.”—Cameron Crise, Macro Strategist, Markets Live. For the full analysis, click here.Some of the main moves in markets:StocksThe S&P 500 fell 0.6% as of 11 a.m. New York time The Nasdaq 100 fell 2.1% The Dow Jones Industrial Average fell 0.3% The Stoxx Europe 600 fell 0.4% The MSCI World Index fell 0.5% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1434 The British pound was little changed at $1.3380 The Japanese yen rose 0.1% to 161.91 per dollar CryptocurrenciesBitcoin fell 0.4% to $63,510.51 Ether fell 0.2% to $1,788.13 BondsThe yield on 10-year Treasuries advanced four basis points to 4.51% Germany’s 10-year yield advanced four basis points to 2.98% Britain’s 10-year yield advanced three basis points to 4.83% CommoditiesWest Texas Intermediate crude rose 2.5% to $70.23 a barrel Spot gold fell 0.2% to $4,155.02 an ounce ©2026 Bloomberg L.P.