Global equities fell broadly on Tuesday, led by a sharp selloff in technology and semiconductor shares, as investors grew more convinced the Federal Reserve will raise interest rates before the end of the year.

The Nasdaq Composite dropped 1.6 percent and the S&P 500 fell 1 percent, while the Dow Jones Industrial Average managed a marginal gain. Nvidia declined 3 percent and Tesla fell 5 percent. The Philadelphia Semiconductor Index slumped 7 percent, its worst performance in recent months, after technical indicators showed the sector was at its most overbought level in three years.

Money markets are now close to fully pricing in a Fed rate hike by September. The two-year Treasury yield, the segment most sensitive to Fed expectations, touched a 16-month high before closing at 4.20 percent. The 10-year yield ended at 4.48 percent, and the U.S. dollar hit a one-year high against a basket of currencies.

Outside the United States, South Korea’s KOSPI fell 10 percent in its sharpest one-day drop since March, while the European STOXX 600 declined 0.51 percent. Brent crude oil held below $80 a barrel as increased tanker traffic through the Strait of Hormuz offset the typical equity-supporting effect of lower energy prices. Gold fell 1.5 percent to $4,127 an ounce as higher rate expectations reduced the appeal of non-yielding assets.

Amanda Agati, chief investment officer at PNC Asset Management Group, said the data did not necessarily justify a rate increase and warned that higher-for-longer rates could weigh on economic growth. David Morrison, senior market analyst at Trade Nation, raised questions about whether pressure on AI infrastructure spending could turn the current selloff into something worse.

Bitcoin and Ethereum also fell, sliding 3 percent and 4.1 percent respectively, as risk assets broadly retreated.

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