Tech Shares Fall Again

Major technology shares fell for a second straight day Tuesday as investors questioned whether heavy spending on artificial intelligence will produce the profits that have supported high valuations. The tech-heavy Nasdaq Composite slumped 628 points, or 2.4 percent, to 25,537 after the opening bell. The index had already closed 1.3 percent lower on Monday.

The S&P 500 tumbled 1.6 percent while the Dow Jones Industrial Average slipped 305 points, or 0.6 percent, to 51,407. Shares of one company that completed an initial public offering earlier this month fell $4.09, or 2.7 percent, to $150.51. The stock has now declined for four consecutive trading days after briefly trading above $200.

Chip-maker Nvidia fell 3.4 percent and Broadcom dropped 2.4 percent. Alphabet declined 1.2 percent in early trading. The selloff spread beyond the United States. South Korea's Kospi index tumbled 10.0 percent to 8,203.84 amid signs of greater regulatory scrutiny in the semiconductor sector.

Anxiety is also growing that possible interest-rate increases later this year could hamper growth. The Federal Reserve's rate-setting committee last week opened the door to higher borrowing costs in 2026 as it seeks to contain inflation linked to rising oil prices.

Economists forecast that a key inflation measure due Thursday will show consumer prices rising to an annual rate of 4.1 percent in May from 3.8 percent in April.

Traders now assign nearly a 90 percent chance the Fed will raise its federal funds rate at least once by year-end, up from 57 percent a week earlier. "For a long time, the market treated AI spending as unquestionably positive. Investors are now becoming more demanding.

They want evidence that unprecedented spending will translate into unprecedented profits," said Nigel Green, CEO of the financial consultancy deVere Group. "What we're witnessing now is investors demanding proof instead of promises. That shift can be uncomfortable, but it's healthy," Green added.