Selling waves from Asia to Wall Street once more test traders’ confidence in the valuation of AI companies. Also, a trading halt.

🌏 Asia Takes Another Hit

  • US stock futures pointed lower Wednesday after another bruising session across Asia.
  • S&P 500 futures slipped 0.2%, Nasdaq futures fell 0.6%, and Dow futures lost about 60 points as investors stayed firmly in risk-off mode.
  • South Korea once again found itself at the center of the storm. The Kospi plunged more than 6% after being down over 11% intraday, triggering a trading halt.
  • Heavyweight chipmakers SK Hynix and Samsung Electronics dragged the benchmark sharply lower. Japan's Nikkei also dropped 2.2%.

💻 AI Trade Faces NewTest

  • SK Hynix is the latest flashpoint. The memory-chip giant reported a 557% jump in operating profit to a record $42 billion, but that still fell short of Wall Street's lofty expectations. Revenue surged 257% to $50.7 billion and also missed forecasts by a tiny margin.
  • Investors responded with a classic case of "great wasn't good enough." SK Hynix shares dropped more than 16%, extending and adding fresh fuel to concerns that AI valuations have simply outrun earnings.
  • Markets have become increasingly unforgiving. After months of rewarding every AI-related headline, traders are now demanding that earnings justify sky-high expectations instead of merely looking impressive.

🛢️ Oil, Fed and Big Tech Await

  • Geopolitics added another wrinkle after Iran launched ballistic missiles toward US forces in the Middle East, according to US Central Command.
  • The missiles were intercepted, but West Texas Intermediate crude climbed about 4% to roughly $82 a barrel, reviving inflation worries.
  • Investors now turn to the Federal Reserve's policy decision later today. Markets overwhelmingly expect rates to stay unchanged, with futures implying roughly a 70% chance of no move.
  • As usual, the statement and Chair Kevin Warsh's press conference may matter more than the decision itself.
  • Earnings season isn't slowing down either. Microsoft, Meta Platforms and Qualcomm all report after the closing bell, giving investors another crucial read on AI spending and demand.