Semiconductor rout sinks Wall Street as Bitcoin slides 2%

The S&P 500 and Dow Jones Industrial Average fell Monday as semiconductor stocks led a broad technology retreat, with the selloff deepening after SK Hynix deferred next-generation high-bandwidth memory expansion and Meta Platforms Inc. unveiled a merchant cloud unit that unsettled assumptions about AI capital spending. Bitcoin slid more than 2% to $62,380 as money markets priced in roughly a 50% probability of a Federal Reserve rate hike this month, up from about 10% just days ago.

"The market is grappling with two distinct shocks — a chip-sector repricing tied to AI infrastructure uncertainty and a macro repricing driven by hawkish Fed signals," said Daniel Newman, chief executive officer at Futurum Group. "When both hit simultaneously, the rotation out of rate-sensitive tech names accelerates."

The selloff was concentrated in semiconductor and AI-related names. Advanced Micro Devices Inc. fell alongside the broader chip complex after SK Hynix's decision to delay HBM4 expansion raised concerns about AI accelerator production timelines and memory supply. Meta's announcement of a merchant cloud unit added pressure by introducing a new variable in the AI computing demand picture, with investors questioning whether hyperscaler capital spending would remain concentrated among existing chip suppliers. The VanEck Semiconductor ETF (SMH) declined more than 2%, tracking losses across the sector.

Bonds, Oil Add to Pressure

The two-year U.S. Treasury yield jumped 12 basis points to 4.29%, its highest level since early last year, as traders boosted bets on a July rate hike. The move followed remarks from Fed Governor Christopher Waller that officials may need to raise rates to bring price pressures under control. West Texas Intermediate crude futures climbed toward $80 a barrel from $67 at the start of the month, stoking fresh inflation concerns amid escalating U.S.-Iran tensions after President Donald Trump reinstated a blockade of Iranian vessels transiting the Strait of Hormuz.

Investors now face a critical two-day stretch. The Labor Department will release the June consumer-price index Tuesday at 8:30 a.m. ET, with economists surveyed by Bloomberg forecasting headline CPI will fall below a 4% annual rate. Fed Chair Kevin Warsh is scheduled to testify on Capitol Hill later this week, and his remarks on the rate path will be scrutinized for any signal on whether the central bank will follow through on a potential hike or hold steady. Analysts at ING said Warsh "has enough ammunition here to ride the rate hike risk and instead hold pat," adding that any hike delivered is likely to be subsequently reversed.

This article is for informational purposes only and does not constitute investment advice.