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Morning Bid: Tech angst on AI doubts

Wed, Aug 20, 2025, 5:41 AM 4 min read

In markets, the trigger for sudden confidence swoons is often elusive, particularly when looking at periodic rotations out of high-flying U.S. tech stocks. And most signs suggest this week's tech retreat may be more about re-positioning than investors receiving some lightning bolt of news. Tuesday's tech shakeout led to a 1.5% plunge in the Nasdaq index even as the blue chip Dow Jones Industrials Average hit a record intraday high. But the tech slump dragged the S&P 500 down 0.6%, and U.S. equity futures showed little sign of a bounce early on Wednesday.

* Reasons for the sudden tech angst tended to be gathered after the event, with some pointing to comments late last week from OpenAI boss Sam Altman on inevitable bubbles in the sector and others pointing to different research papers fretting variously about both the limited returns on blistering AI spending to date and also its growing jobs destruction. The jitters also come ahead of next week's earnings report from chip behemoth Nvidia, some concern about the wider implications of the U.S. government's proposed stake in ailing chip giant Intel and caution ahead of the Federal Reserve's annual Jackson Hole conference this week.

* Even though Fed concerns were cited across markets on Tuesday, there was little shift in Fed futures pricing during the day - and they still show just over an 80% chance of a rate cut next month. With Fed meeting minutes due later today and 20-year bonds under the hammer too, Treasury yields were flat and the dollar firmer. An unexpected pick-up in housing starts in July was reported on Tuesday but this was offset by a drop in building permits to five-year lows.

* Tech-heavy stock indexes overseas were hit by Wall Street's wobble, with Japan's Nikkei losing 1.5% and South Korea's Kospi down 0.7%. Lifted on Tuesday by Ukraine deal hopes, European stocks were flatter today, with euro inflation coming in bang on forecast and a hotter-than-expected UK inflation reading downplayed due to seasonal airfare skews. Chinese stocks outperformed, with the Shanghai main index rallying to 10-year highs, as investors rotated stock holdings and hoped for more government stimulus.

Be sure to check out today's column, which looks at a particular dilemma facing the Fed: should it ease to offset weakness in the housing market if that means spurring the blistering AI infrastructure boom?