Tech Selloff Deepens as Nasdaq 100 Slides 2% Ahead of Fed Signal

Technology stocks declined further on Wednesday with the Nasdaq 100 sliding 2% as investors trimmed positions in high-valuation names ahead of critical Federal Reserve policy guidance.

The selloff added to recent pressure in U.S. equities as traders reduced exposure to growth stocks most sensitive to higher borrowing costs.

The weakness was broad-based across megacap technology, semiconductor, and software companies, which had been leading the market rally earlier this year.

Market participants remain cautious as the Federal Reserve prepares to release fresh guidance on interest rate policy.

Investors are seeking clarity on whether policymakers will maintain a restrictive stance to contain inflation or signal a potential easing cycle later this year.

Yields on U.S. Treasuries held near recent highs, reflecting persistent concerns over inflation resilience and the likelihood of rates staying elevated. The U.S. dollar also firmed, adding further pressure on risk assets.

Equity strategists noted that the shift away from expensive technology shares is consistent with a market rotation into defensive and value sectors as investors brace for tighter liquidity conditions.

Despite the losses, the S&P 500 and Dow Jones Industrial Average saw smaller declines compared to the Nasdaq 100, underscoring the concentration of selling in growth-focused sectors.

Analysts warn that further volatility could follow depending on the Fed’s communication, particularly if policymakers adopt a firmer stance against inflation.