Tech Stock Selloff Stalls as Silver Plunges Again: Markets Wrap

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(Bloomberg) — A global slump in technology stocks paused on Thursday as traders debated whether a selloff spanning everything from software shares to chipmakers had gone too far. Silver tumbled anew.

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Nasdaq 100 futures rose 0.2% after the benchmark erased gains for the year over the prior two sessions. European stocks dropped 0.4%, dragged lower by auto and energy stocks. S&P 500 contracts fluctuated.

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Traders are weighing whether the flight from tech has been excessive, driven by concerns over disruption from artificial intelligence, lofty valuations and vast capital outlays. In premarket trading, Alphabet Inc.’s far higher-than-expected spending forecast lifted stocks tied to the buildout of AI infrastructure such as Broadcom Inc., even as shares of the Google parent slipped 1.6%.

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Outside of tech, attention was squarely on precious metals. Silver plummeted as much as 17% as the commodity struggled to find a floor following a historic rout. Gold fell below $4,900 an ounce. Bitcoin touched $70,000.

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“Three quarters of software stocks are in oversold territory, and the momentum trade that has been the way to play tech and software last year now is under severe pressure,” said Andrea Gabellone, head of global equities at KBC Securities. “I expect reason to come back to the table and a rebound shortly, probably a selective one.”

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The dollar rose 0.2%, hitting the highest level in two weeks. US Treasuries were little changed.

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The pound was worst performer among major currencies, while the yield gap between two- and 10-year gilts hit the widest since 2018 as a fresh round of political turbulence weighed on UK assets. 

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Doubts are building over Prime Minister Keir Starmer’s grasp on power, driving up the risk premium demanded by investors. Starmer has come under growing pressure over his decision to appoint Peter Mandelson as US ambassador, despite knowing about his connection to disgraced financier Jeffrey Epstein. 

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The Bank of England and European Central Bank are scheduled to announce their latest interest-rate decisions on Thursday, with policymakers at both institutions expected to stand pat. The euro was little changed.

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While AI-driven selloffs have surfaced in the past, nothing has rivaled the rout that rippled through stock and credit markets this week. With the US economy proving resilient, investors are rotating into other sectors that stand to benefit from faster growth.

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“Things appear somewhat shaky at a surface level, but I’d argue things are considerably more resilient,” said Michael Brown, senior strategist at Pepperstone. “There are both ‘push’ factors driving this churn, as participants take an increasingly skeptical view of the AI theme, as well as ‘pull’ factors amid increasing signs of robustness in the underlying US economy.”