The tech selloff reignited Monday afternoon, with AI-linked stocks taking another hit after their worst week since April’s tariff-driven pullback.
Despite a calm start to the session—major indexes traded mostly flat by midday—selling pressure accelerated late in the day, sparking broad declines across sectors, with tech leading losses.
The Nasdaq 100 closed 0.83% lower at 24,799 on Monday, bringing its month-to-date drop to 4.3%, its worst monthly performance since March. The S&P 500 fell 0.92% to 6,672.
Fading hopes for Fed rate cuts may be what fueled Monday’s renewed selloff.
Just last week, markets were evenly split on whether the Fed would hold or cut rates at its Dec.10 meeting. But as of Monday, those odds have shifted. The CME FedWatch Tool now shows a 55% chance that the Fed will hold rates steady at 3.75%-4.00%.
What changed? Comments from Fed Vice Chair Philip N. Jefferson, who spoke at the Federal Reserve Bank of Kansas City, nudged market expectations.
“The current policy stance is still somewhat restrictive, but we have moved it closer to its neutral level,” Jefferson said.
According to Jefferson there is now the need “to proceed slowly” as the balance of risks between inflation and the labor market is evolving. He also added that “it remains unclear how much official data we will see” before the next meeting—signaling a cautious tone.
Meanwhile, Governor Christopher Waller, speaking in London at the Society of Professional Economists Annual Dinner, took a more dovish view, arguing for a continuation of rate cuts.
“The labor market is still weak and near stall speed,” Waller said. “Tariffs appear to be causing a one-time price shock, not persistent inflation.”
Separately, President Donald Trump stirred headlines with aggressive remarks during a press event with FIFA officials at the White House.
When asked about the deployment of U.S. troops in Venezuela, Trump said: “I don’t rule out anything regarding Venezuela, we just have to take care of the issue.”
On drug trafficking, he added, “If we had to strike Mexico to stop drug flow, that’s OK with me.”
AI Stocks Keep Sliding: Palantir Tanks 15% in November
The shift in rate expectations hit high-growth sectors hardest—especially AI and chipmakers.
The Global X Artificial Intelligence & Technology ETF (NYSE:AIQ) dropped 1.6%, while the iShares Semiconductor ETF (NYSE:SOXX) sank 2.6%.
Nvidia Corp. (NASDAQ:NVDA) alone shed nearly $200 billion in market value, despite a price-target hike from Wells Fargo, which raised its forecast from $220 to $265. Nvidia reports earnings on Wednesday after the close.
Palantir Technologies Inc. (NASDAQ:PLTR) fell another 2.7% Monday, extending its monthly slide to more than 15%—on pace for its worst month since August 2023.
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