U.S. technology stocks were poised for a rebound on Wednesday after artificial intelligence valuation fears triggered a two-day selloff that wiped nearly US$1.3 trillion from the market capitalization of Nasdaq 100 companies.
Futures Signal Recovery
Contracts on the Nasdaq 100 index gained 0.6% by 4:35 a.m. in New York, following a 3.3% slump in the previous session. S&P 500 futures edged about 0.2% higher, indicating a broader market recovery.
The rebound comes after a sharp decline that saw the tech-heavy index lose significant value, driven by growing concerns that AI-related stocks had become overvalued.
Market Context and Analyst Views
Jennifer Bender, global chief investment strategist at State Street Investment Management, characterized this week's declines as typical short-term hiccups. "We expect these kinds of volatility episodes to continue," Bender said. "The shifting geopolitical landscape means that political news is less predictable, the world order is increasingly competitive and power-based, and equity markets are more highly concentrated."
The scorching rally in tech stocks has faltered in June as investors questioned whether AI-related stocks had become too expensive. While the Nasdaq 100 remains about 28% higher compared with March 30, traders are bracing for a volatile summer when liquidity typically dries up.
Comparisons to Dot-Com Era
Goldman Sachs Group Inc. partner Bobby Molavi noted that the current market is beginning to feel similar to the final months of the dot-com era, when investors became accustomed to sudden 5% moves. He raised the question of "what happens if 10% breaks, and whether there is no floor in sight after that."
In Asia, stock volatility persisted, with South Korean equities swinging between gains and losses as investors focused on the outlook for chipmaker earnings. Results are due later Wednesday from Micron Technology Inc., the single biggest contributor to the S&P 500's 7.6% gain this year.
Individual Stock Movements
SpaceX shares fluctuated in premarket trading, a day after the Elon Musk-led rocket and satellite company snapped a three-day selloff. The broader market remains on edge as geopolitical uncertainties and valuation concerns continue to weigh on investor sentiment.
