One of the factors that led to the decline in the stocks was the significant increase in the US Treasury yields. On Tuesday, the 30-year Treasury yield momentarily reached 5.00% and this is because of the fear of the US fiscal policy and how the same affects the overall economy.
The rising yield of bond markets is an indication of concerns about a growing fiscal deficit and a growing government debt, especially after the recent ruling by a court that had ruled former illegal. This has raised the issue of whether the US government would be compelled to pay back tariffs, which would further strain the fiscal deficit.
Investors responded swiftly to the turbulence in the bond market, causing a sudden sell-off in technology stocks. , a leading company in the semiconductor market, fell 3 percent, and Advanced Micro Devices (AMD) fell 3.5%.
The two companies have been leading in the AI boom, but investors are becoming increasingly skeptical about the sustainability of AI-driven growth. This doubt has caused a reassessment of large stakes in both hardware and software companies with heavy investments in artificial intelligence.