Stock Sales Continue: Technology Stocks Under Pressure

The slide in the US stock markets continued on Monday, as investors scaled back their expectations regarding future interest rate cuts by the Federal Reserve. A strong labor market report from Friday raised doubts about whether further rate cuts are actually sensible given the stable economic situation and ongoing inflation risks. Current market data, based on the CME FedWatch Tool, suggests a 25-basis-point cut this year, but renowned Wall Street analyst firms now see no further rate cuts on the horizon this year. Economists at Bank of America stated in a Friday statement that the robust labor market and inflation lingering above the target value leave little room for further monetary easing. On Monday, technology stocks were particularly weak, with the Nasdaq 100 Index recording a decline of about 1%. This followed the announcement of new export control rules for AI technology by the Biden administration after the market close on Friday. Nvidia, AMD, and Broadcom shares were particularly pressured, losing between 2% and 5% during the trading session. The new rules pertain to export quotas for GPU chips with AI functions in approximately 120 countries and aim to restrict China’s and Russia’s access to this technology. Nvidia sharply criticized the proposals, warning that such measures could jeopardize both innovation and the US's global technology leadership. They believe that restricting access to mainstream computing technology could seriously impede AI advancements both nationally and internationally.