The tech selloff went global overnight. South Korea's Kospi fell 10% and hit circuit breakers twice — the steepest drop in three months. Japan's Nikkei snapped an eight-session winning streak. Bank of America published a note warning about rate hikes. And by the time the U.S. opened, the damage was done: the S&P fell 1.3%. The Nasdaq dropped 2.1%. The semiconductor ETF lost 6.5%. Micron fell 11%. SpaceX slid below its first-day opening price of $150 for the first time. But here's the line that tells you more than any of those numbers: 56 of the 100 stocks in the Nasdaq-100 finished green. The Russell 2000 went up for the second straight day. The selloff is violent — and it's concentrated in about forty names. The other five hundred are fine.
The Close
The S&P 500 lost 1.3%. The Nasdaq fell 2.1%. The semiconductor ETF dropped 6.5% — its worst day since the June 5 crash. Micron sank 11.4% ahead of tomorrow's earnings. Qualcomm fell 8.6%. Arm Holdings lost 8.4%. SanDisk dropped 11.7%. Taiwan Semi fell 5.2%. This was a chip rout from Seoul to San Jose. And it started at 2 AM Eastern, when the Kospi hit its first circuit breaker.
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| Korea Kospi | circuit breakers 2x | −9.99% | ||
| Chip ETF (SMH) | $625.62 | −6.5% | ||
| Nasdaq-100 | 56 of 100 green | index −2.1% | ||
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| Utilities |
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+0.8% | ||
| Real Estate |
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+0.6% | ||
| Health Care |
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+0.4% | ||
| Consumer Staples |
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+0.2% | ||
| Financials |
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−0.2% | ||
| Industrials |
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−0.4% | ||
| Materials |
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−0.6% | ||
| Energy |
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−0.8% | ||
| Consumer Discretionary |
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−1.2% | ||
| Communication Services |
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−1.5% | ||
| Information Technology |
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−3.0% | ||
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Korea's Kospi fell 9.99% on Tuesday and tripped circuit breakers twice during the session. The selling was driven by a Bank of America note warning that the Fed's hawkish dots — nine of eighteen officials wanting hikes — were more serious than the market had priced. The note hit Asian markets overnight. By the time Tokyo opened, the Nikkei was already falling. By the time Korea opened, the panic was full-blown. Memory chip stocks led the carnage — Korea's SK Hynix, Samsung, and the entire semiconductor supply chain got hit before the U.S. session even started.
SpaceX fell to around $147 — below the $150 price where the stock opened on its first day of trading two weeks ago. The company is now down 33% from its $219 peak. Still above the $135 IPO price, but the cushion is shrinking. SpaceX announced a $20 billion bond offering to fund its AI ambitions and signed a computing deal with a startup called Reflection AI. That's two capital raises in eleven days — the $75 billion IPO and now $20 billion in bonds. The market is starting to ask how much capital this company needs.
Oracle disclosed it cut 21,000 jobs over the past year as AI replaced roles. That's the other side of the AI trade — the companies building AI are spending billions, and the companies using AI are firing thousands. Schwab's Kevin Gordon posted that CPI software prices have "clearly broken out" and are increasing at a 59% annualized pace. AI is creating inflation in the category where it was supposed to create deflation. That's a number worth watching.
Iran's foreign ministry contradicted Vance on Tuesday, saying there are "no plans for IAEA inspections" — directly after Vance said he expected nuclear inspectors to return this week. Iran's chief negotiator went further: the Strait of Hormuz "will never return to its pre-war conditions." Treasury Secretary Bessent authorized Iranian oil sales through August under a 60-day general license. Oil is flowing. But the diplomatic language is moving in opposite directions.
What The Market Is Pricing In
Korea tripped circuit breakers. The Nasdaq fell 2%. The semiconductor ETF lost 6.5%. And 56 out of 100 Nasdaq-100 stocks closed green. Those four facts, taken together, tell you exactly where the market stands.
Here's the chain. The AI trade — the one that drove Nvidia from $100 to $200, pushed SpaceX to a $2.8 trillion valuation in four days, and made semiconductors the best-performing sector of the year — is repricing. Not dying. Repricing. The BofA note reminded the market that nine of eighteen Fed officials want to hike rates, that CPI is still 4.2%, and that the dot plot's median sits above the current rate. When rates are headed higher, the stocks with the highest multiples — the ones trading on next year's earnings, not this year's — get marked down first. Micron at 40 times earnings falls 11%. IBM at 15 times earnings goes up 4%. The math hasn't changed. The discount rate has.
Sometimes the selloff happens in one country first because that country has the most exposure. Korea makes 60% of the world's memory chips. When Bank of America says the rate outlook is worse than expected, the stocks that are most sensitive to rate changes — high-growth semiconductor names — sell hardest. And the country where those stocks make up the biggest share of the market — Korea — breaks first. The Kospi circuit breakers aren't a Korean story. They're an interest-rate story that showed up in Korea's time zone before it showed up in ours.
Korea tripped circuit breakers twice, the Nasdaq fell 2.1%, and the semiconductor ETF lost 6.5% — but 56 of 100 Nasdaq stocks finished green and the Russell went up, and the market is telling you this is a repricing of the AI trade's highest-multiple names, not a repricing of the economy. That's the difference between a rotation and a recession. In a recession, everything falls. In a rotation, the expensive stuff falls and the cheap stuff rises. Today the expensive stuff fell hard. The cheap stuff — IBM, Accenture, Public Storage, the entire Russell 2000 — had a good day. As long as that split holds, the selloff stays contained.
I watched Asian circuit breakers in October 1997. The Dow fell 554 points — over 7% — as the Asian financial crisis spread from Thailand to Korea to Hong Kong. NYSE circuit breakers triggered for the first time. Everyone said contagion was coming. The U.S. economy was strong. The S&P recovered within two months and rallied 28% the following year. The lesson: Asian circuit breakers look like the end of the world on the day. If the U.S. economy holds — and with retail sales up 0.9%, jobs at 172,000, and the peace deal holding — it usually turns into a buying opportunity. The question is whether Micron's earnings tomorrow night confirm the AI demand story or break it.
What's Next
Three things I'm watching…
01 — Micron earnings Wednesday June 24 after the close
This is now the most important earnings report of the quarter. Micron fell 11% today ahead of the print. The stock has been the tell for every AI cycle this year — it rallied 10% on the June 8 bounce, led every chip recovery, and now it's leading the selloff. If Micron beats on data-center revenue and guides above expectations, the chip selloff was overdone and the Nasdaq stabilizes. If it misses or guides flat, the 6.5% semiconductor ETF drop today is the opening act and the rotation out of AI accelerates hard.
02 — May PCE inflation Thursday June 26
The Fed's preferred inflation measure. The May reading will still capture oil at $90-plus, so the headline will be ugly. The consensus is 3.5-3.6% on headline, 3.2-3.3% on core. What matters more than the number itself is whether the core reading is below the Fed's 3.3% projection from last week. If it is, the hawkish dots lose their edge and the 2-year yield eases. If core is above 3.3%, the BofA note that triggered this week's selloff gets validated and the hike odds go back up.
03 — SpaceX at $147: does the IPO price hold?
The stock is down 33% from its $219 peak and is now below the $150 first-day open. The $135 IPO price is the line in the sand. If SpaceX holds above $135, the selloff is a normal post-IPO correction — the kind every hot IPO goes through. If it breaks $135, the $75 billion offering was priced too high and the underwriters (Goldman, Morgan Stanley) have a problem. The $20 billion bond offering and the Reflection AI deal tell you management sees the pullback as an opportunity to raise cheap capital. The market is deciding whether to agree.
Korea broke. The Nasdaq fell 2%. The chips got crushed. And the Russell went up. The broadening trade held for a second day through a global rout. Tomorrow Micron decides whether the AI story is repricing or breaking. Thursday the PCE decides whether the Fed stays hawkish. Two days. Two numbers. That's the week.
That's it for today. See you tomorrow after the close.
