Wall Street carnage continues as Nvidia leads US tech selloff

A wave of panic selling hit Wall Street on Tuesday, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all suffering their steepest daily percentage declines since early August.

The carnage was widespread, with nine of the 11 sectors within the S&P 500 sinking into the red, led by sharp declines in technology, energy, communication services and materials.

The selloff was triggered by lacklustre US manufacturing data, which, despite a modest uptick in August, remained in the doldrums following an eight-month low in July.

Chipmaker Nvidia bore the brunt of the bloodbath, plummeting 9.5 per cent in regular trading and sinking another 2.4 per cent after hours following news that the US Justice Department had issued subpoenas as part of an antitrust investigation.

It led to $279bn being wiped off its market value – the largest single-day loss ever recorded for a US stock.

A ripple effect was felt across the tech sector, with Alphabet, the owner of Google, tumbling 3.6 per cent, Apple losing 2.7 per cent, and Microsoft shedding 1.8 per cent.

The Philadelphia SE Semiconductor Index nosedived 7.8 per cent, with every single member of the index falling by at least 5.4 per cent.

“As concerns grow that AI’s promised revolution might take longer than anticipated, some investors are rethinking the high valuations. But this is no time to write off Nvidia,” said Nigel Green, chief executive of  financial advisory, Devere Group.

“Nvidia is still up 118 per cent for the year,” explained Green, adding that “the market may be reacting to short-term concerns, but Nvidia’s role in the future of AI remains solid. This dip should be viewed as a temporary setback, not a sign of declining relevance.”

Tesla also slid 1.6 per cent on news that it plans to produce a six-seat variant of its Model Y in China from late 2025. Boeing was another high-profile casualty, plunging 7.3 per cent after Wells Fargo downgraded the aerospace giant’s stock from “equal weight” to “underweight.”

It is the second major global stock sell off in recent weeks. Early August saw trillions of dollars erased from Nasdaq-listed giants, as disappointing  US job growth figures and mounting recession fears triggered a global market rout.

It comes ahead of crucial data for the US economy. Traders are awaiting several labour market reports ahead of Friday’s non-farm payrolls data for August.

The Federal Reserve is expected to lower interest rates at its meeting on 17-18 September, after Chair Jerome Powell’s recent support for easing monetary policy.