The global technology selloff intensified on Tuesday, with the Nasdaq-100 losing 3.29% and the S&P 500 dropping 1.44%, as investors questioned whether corporate AI adoption could justify elevated price tags and the Federal Reserve’s hawkish stance reinforced expectations that interest rates will remain higher for longer. Traders pointed to profit-taking after a prolonged rally that left many chip and mega-cap tech names trading at price-to-earnings multiples well above historical averages. Stronger-than-expected US economic data in recent weeks dampened hopes for near-term rate cuts, weighing on growth-oriented equities.

The shockwaves hit Asian markets hardest on Wednesday. South Korea’s Kospi index plunged 10% on Tuesday—its steepest one-day drop since March—led by 12% declines in SK Hynix and Samsung, before rebounding 2.2% the following session. Japan’s Nikkei swung between gains and losses to close down 0.8%, while MSCI’s broadest index of Asia-Pacific shares outside Japan was nearly flat. India’s Nifty 50 fell 1.2% and the volatility index jumped 8.6%, as foreign portfolio investors extended their June selling streak. Analysts at Moomoo Securities Australia described the rapid price swings in both directions as “a sign of instability.”

The selloff also ensnared newly public SpaceX, whose shares briefly fell below their $150 IPO price before recovering to close at $156, a 1% gain, after a 16% plunge on Monday erased $400 billion in market value. The firm raised $25 billion in bonds for AI expansion and announced a computing-resources deal with Reflection AI. Oil prices extended declines to near four-month lows, with Brent crude down 1% at $76.31 a barrel, as maritime tracking showed increased tanker traffic through the Strait of Hormuz amid tentative Iran peace talks. However, conflicting US and Iranian accounts of the deal’s terms—particularly over tolls and nuclear inspections—kept uncertainty high. The dollar index rose to a one-year high, while the euro fell to its lowest in a year and the yen hovered near 40-year lows, prompting intervention warnings.

The next test for sentiment comes with earnings from US chipmaker Micron Technology later Wednesday, which will offer a fresh signal on semiconductor demand. Investors are also watching for further Fed commentary on the rate path and for clarity on the Iran peace accord, as both factors have driven the cross-asset volatility.