Global stock markets fell sharply on Tuesday as a weeks-long rally in technology stocks reversed course, driven by renewed skepticism over artificial intelligence valuations.
Wall Street indexes opened higher before turning decisively lower, with the Nasdaq (NASDAQ: COMP) dropping 3.4 percent to 25,055.71 and the S&P 500 shedding 2.1 percent to 7,253.27.
Apple (NASDAQ: AAPL) led the declines among major tech names, with shares falling more than four percent after critics gave lukewarm reviews to an AI update for the company’s Siri voice assistant.
The disappointing Siri reception stoked broader caution among investors who had already pushed tech valuations to record highs over recent weeks on AI-driven optimism.
Selling pressure had already been building since Friday, when stronger-than-expected US jobs data raised the prospect of higher interest rates, increasing borrowing costs for AI firms with massive planned spending on chips and data centers.
“Investors remain cautious after the sharp selloff at the start of the week,” said Anna Macdonald, investment strategy director at Hargreaves Lansdown, reflecting the mood across trading floors.
OpenAI’s announcement that it had applied for an IPO, arriving just as Elon Musk’s SpaceX prepares what is expected to be a record-breaking share sale, added further pressure as investors rotated out of existing holdings.
Katherine Brooks, research director at trading platform XTB, offered a pointed take, noting that “the IPOs of SpaceX, Anthropic and OpenAI are less about buying into a business and more about buying into an idea.”
Oil prices also fell sharply, with Brent crude dropping 4.4 percent to $90.12 a barrel and briefly dipping below $90 for the first time since April 14, as peace deal speculation weighed on energy markets.
President Donald Trump said on Tuesday that negotiations to end the Middle East war were in their final stages and suggested a deal could arrive in “two or three days,” sending crude prices lower on demand expectations.
Briefing.com analyst Patrick O’Hare noted that “the market has heard that before, and even though it has yet to see an actual deal, it continues to respect the possibility,” tempering optimism around any breakthrough.
Trump later complicated the outlook by stating the US “must” respond after Iran shot down an American military helicopter, introducing fresh geopolitical uncertainty into markets already on edge.
European markets closed mixed, with London’s FTSE 100 falling 1.4 percent, partly due to a slide in British pharmaceutical giant GSK after it announced an all-cash $10.6 billion takeover of US cancer specialist Nuvalent.
Frankfurt and Paris had shown earlier strength after German industrial production and exports both ticked higher in April, offering some relief for Europe’s largest economy.
Asian markets saw more mixed results, with Seoul’s Kospi surging 8.2 percent in a rebound following Monday’s plunge of more than eight percent, while Tokyo’s Nikkei 225 gained 2.2 percent.
Attention now turns to Wednesday’s release of US consumer price index data, with the figure expected to hit 4.2 percent, which would mark the highest inflation reading in more than three years.
Such a result would significantly increase the likelihood of a Federal Reserve rate hike in the coming months, adding a new layer of concern for equity investors still digesting the week’s volatility.
The European Central Bank is also widely expected to raise rates by 25 basis points at its Thursday meeting, as eurozone inflation continues to climb following energy price surges tied to the ongoing Middle East conflict.
