Wall Street Tech Selloff Spreads Across Markets as Bond Yields Surge

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•  25 Sep 2025
 

•   BABA  
   
  -0.55%
•   GM  
   
  +1.12%
•   KMX  
   
  -20.07%
•   LAC  
   
  +22.63%
•   MU  
   
  -3.02%

Wall Street's tech selloff deepened Wednesday as technology weakness spread across broader markets, with bond yields surging toward 4.2% and creating a challenging environment for growth stocks. The tech selloff that began with artificial intelligence darlings has now infected the entire equity market, forcing investors to reassess their positions as rising yields make bonds increasingly attractive alternatives to stocks.

The S&P 500 ($SPY) declined 0.6% for its third consecutive day of losses, while the Dow Jones Industrial Average ($DIA) retreated 0.2% and the Nasdaq Composite ($QQQ) led the selloff with a 0.8% decline. This tech selloff reflects growing investor skepticism about inflated valuations in the artificial intelligence sector, with Oracle Corporation ($ORCL) continuing its descent after falling more than 10% from recent peaks. The enterprise software giant's weakness exemplifies how the tech selloff has particularly impacted companies that rode the AI wave to excessive valuations.

Nvidia Corporation ($NVDA) also materialized significant losses, symbolizing the cooling sentiment toward AI investments that once drove the broader tech rally. The semiconductor leader's decline represents a fundamental reassessment of artificial intelligence valuations across the technology sector, as investors question whether recent AI enthusiasm justified the massive run-up in stock prices. This tech selloff in AI names has created a ripple effect throughout the broader market, with investors now scrutinizing any company with elevated valuations.

The pressure on equities isn't limited to the tech selloff, as bond yields surged dramatically following stronger-than-expected economic data. The 10-year Treasury yield climbed toward 4.2% after unemployment claims data revealed just 218,000 new applications versus the forecasted 235,000, indicating continued labor market strength. Additionally, the Commerce Department revised second-quarter GDP growth upward to 3.8%, reinforcing concerns that the Federal Reserve may maintain higher interest rates longer than previously anticipated.

These rising bond yields create additional headwinds for the ongoing tech selloff, as higher yields make government bonds more attractive relative to growth stocks that rely on future earnings potential. The combination of tech selloff concerns and surging yields has created a perfect storm for equity markets, particularly affecting high-multiple technology names that dominated market gains throughout 2024.

Alibaba Group ($BABA) provided a bright spot amid the broader tech selloff, surging 9.4% after announcing expanded artificial intelligence investments and launching its new Qwen3-Max language model. CEO Eddie Wu's commitment to invest over $50 billion in cloud infrastructure and AI development helped the Chinese e-commerce giant buck the prevailing tech selloff trend. The company's strategic pivot toward artificial intelligence demonstrates how some technology companies can still attract investor interest despite the broader tech selloff environment.

Micron Technology ($MU) gained 0.3% after delivering fourth-quarter fiscal results that exceeded expectations, with revenue jumping 46% to $11.3 billion driven by strong demand for AI data center memory. The memory chip manufacturer's success highlights how companies with genuine AI infrastructure exposure can outperform during this tech selloff period, as investors distinguish between speculative AI plays and companies with tangible AI-related revenue streams.

The day'standout performer was Lithium Americas ($LAC), which soared 67% on reports that the Trump administration is considering acquiring up to 10% of the company as part of its critical minerals strategy. This massive gain occurred despite the broader tech selloff, demonstrating how government involvement can override prevailing market sentiment. The potential investment in the Thacker Pass lithium project, developed with General Motors ($GM), represents a strategic move to reduce U.S. dependence on Chinese mineral supplies.

General Motors itself gained 2.4% to approximately $60 after UBS upgraded the stock from Neutral to Buy with an $81 price target, citing strong profitability expectations and momentum in vehicle electrification. The automaker's advance shows how traditional industrial companies can attract investment flows during periods of tech selloff, as investors seek value in more established sectors.

CarMax Inc ($KMX) exemplified the broader market weakness, plummeting 21.2% after reporting disappointing earnings that missed estimates across multiple metrics. The used car retailer posted a 6% revenue decline to $6.59 billion with earnings per share of $0.64 versus expectations of $1.03, highlighting how the challenging economic environment extends beyond the tech selloff to affect consumer-facing businesses.

Federal Reserve Chair Jerome Powell's recent warnings about elevated stock valuations have largely been ignored by markets, but his measured comments suggest careful consideration of potential bubble risks. Powell's preference for a "soft landing" scenario becomes more challenging as the tech selloff accelerates and bond yields surge, creating conditions that could force more aggressive monetary policy responses.

Market veteran Ed Yardeni of Yardeni Research remains optimistic despite the tech selloff, projecting the S&P 500 could reach 7,000 by year-end. Yardeni notes that even the most optimistic analysts have been surprised by recent earnings resilience, particularly given concerns about trade tariffs and geopolitical tensions. Corporate profit growth estimates for 2025 have jumped from 7.1% to 9.4% since early September, providing fundamental support that could eventually halt the tech selloff.

The market faces multiple uncertainties including tomorrow's PCE inflation report release, the Federal Reserve's preferred inflation gauge, alongside potential federal government shutdown concerns. The White House has reportedly instructed federal agencies to prepare for possible workforce reductions if budget approval isn't secured, adding political uncertainty to the existing tech selloff and rising yield pressures.

OpenAI, Oracle ($ORCL), and SoftBank's announcement of $400 billion in new U.S. data center investments demonstrates continued confidence in long-term AI infrastructure demand despite the near-term tech selloff. The planned facilities across Texas, New Mexico, and Ohio will provide 7 gigawatts of capacity, supporting the companies' half-trillion-dollar AI infrastructure goals under the Stargate project.

Today market action suggests the tech selloff may represent a healthy correction rather than the beginning of a prolonged bear market. While surging bond yields and technology weakness create near-term headwinds, strong corporate earnings and economic fundamentals could provide a floor for equity markets. Investors should monitor Federal Reserve communications and earnings revisions closely as markets navigate between the ongoing tech selloff, monetary policy uncertainty, and political developments that continue to influence trading sentiment.

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