US stock index futures were sharply lower in early trade on Tuesday. Investors continued to rotate out of major technology names following losses on Monday. Yesterday, the tech-heavy NASDAQ dropped 1.3%, while the S&P 500 lost a more modest 0.4%. But the Dow gained 0.3% while the small cap Russell 2000 added 0.8% to finish at a fresh all-time closing high.
The sell-off began soon after the US open as traders returned to work after the long holiday weekend. But it picked up momentum overnight and into this morning, led by some of the market-leading semiconductor stocks, which have hogged the limelight of late.
Micron Technology (which reports after Wednesday’s close) was down 10% this morning. It was closely followed by Super Micro Computer (-7%), Marvell Tech (-8.9%), Intel (-8.7%), Advance Micro Devices (-6.4%) and the Taiwan Semiconductor Manufacturing Company (-5.5%). Things weren’t helped by SpaceX, which was down another 3% this morning and is now just 11% above its IPO price of $135.
Source: TN Trader
Questions are once again being raised over AI infrastructure spending, particularly as some corporate giants plan to sell equity to help fund expansion. Alphabet, which dropped close to 5% yesterday, recently announced plans for an $80 billion stock sale to fund AI infrastructure expansion. There are also reports that Meta Platforms is considering a major public stock offering to fund AI spending.
Historically, mega-cap US tech companies funded expansion from operating cash flow and occasionally debt. Last week, NVIDIA said it would raise $25 billion through a bond offering, its first in five years. So, corporations are looking to raise a lot of money this year, not forgetting the expected IPOs from Anthropic and OpenAI after the summer. The money must come from somewhere.
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