Contagion continues…

The tech stock rout, which accelerated during yesterday’s Congressional hearing on social network bias, accelerated on Thursday, this time led by a selloff in chipmakers dragging the Nasdaq Composite to a two-week low.

The biggest loser was KLA-Tencor, which sank 7.8%, pulling the semiconductor space lower by 1.7%, while semi cap equipment peers Lam Research, Applied Materials, Micron, and AMD also slumped.

The drop accelerated during KLA-Tencor’s 9:30 am presentation at the Citi Global Technology Conference in New York, after which shares of KLAC plunged as much as 8.4%, its largest one-day loss in more than two years. Meanwhile, Micron, the second-worst performer in the SOX with a decline of more than 7%, was removed as a top semiconductor large-cap idea at Baird on concerns over peaking gross margins, DRAM pricing topping out and worsening NAND oversupply.

Meanwhile, as Bloomberg notes, Morgan Stanley also had a note out saying memory markets are worsening into the fourth quarter on inventory and pricing concerns; weaker demand for DRAM products is creating an inventory surplus at the manufacturers and pressuring prices, analysts led by Shawn Kim wrote in a note.

Casino shares were also under pressure with Las Vegas Sands down 2.8 percent. The threat of fresh tariffs by the Trump administration on Chinese goods loomed over equity markets.

After some early gains, the S&P 500 also slumped further away from its recent all-time highs and further below 2,900 as investors were spooked by the imminent announcement of some $200BN in new Chinese tariffs and ahead of Friday’s jobs report.

After initially falling, the dollar rebounded as emerging market stocks stumbled into bear market territory after enjoying an early morning respite from the selling. Meanwhile, Treasuries edged higher after a disappointing ADP report.