Global stock markets edged higher on Tuesday, recovering from a sell-off that began Friday when U.S. chip stocks declined sharply following a downbeat earnings report from Broadcom. The negative momentum spread to Asian and European tech stocks before stabilizing. U.S. stock futures traded broadly higher on Tuesday, with Nasdaq 100 futures adding 0.7%, while South Korea's Kospi index jumped more than 8% following two days of losses. The sell-off was triggered by Broadcom's earnings report sparking a rotation out of AI-linked stocks. The recovery comes amid a broader context of volatility in technology equities after a nine-week rally fueled by AI optimism.
Nasdaq 100 Futures Add 0.7% as Markets Stabilize
By Tuesday, global shares appeared to be recovering from the sell-off. U.S. stock futures were last seen trading broadly higher, with futures tied to the tech-dominated Nasdaq 100 adding 0.7%. European tech stocks were on track for their second consecutive day of gains, with the regional Stoxx 600 Technology index clawing back a fraction of the losses incurred on Friday. South Korea's tech-heavy Kospi index jumped more than 8% on Tuesday following two days of losses.
Friday saw U.S. equities come under pressure, led by a sharp downward turn in chip stocks. The negative momentum bled into Asian trade, while European tech stocks also took a beating.
Edwards Asset Management Targets S&P 500 at 7,700
Robert Edwards, Chief Investment Officer at Florida-based Edwards Asset Management, said in a note that the tech stock pullback was "a gift for investors." Edwards Asset Management, which manages assets worth $3 billion, is expecting the S&P 500 to reach 7,700 points by the end of the year—representing upside of around 4% from Monday's closing price.
"We remain buyers on the dips," Edwards said, describing market movements as a "sawtooth pattern." He said that although his forecast suggested much of the market's gains were already priced in this year, he expected further volatility to create "ample buying opportunities."
Edwards said "sharp pullbacks have been met with aggressive buying because investors, despite the noise, know that strong fundamentals, including strong revenue and earnings growth, remain in place."
Columbia Threadneedle and Citi Analysts Warn of Volatility Risks
Anthony Willis, senior economist at Columbia Threadneedle Investments, said in a note on Tuesday that recent market weakness "looks more like a repricing than a fundamental break in the growth story." However, he noted that selling pressure serves as a reminder that "strong fundamentals do not eliminate volatility."
Willis noted that, prior to the sell-off, AI optimism had fueled a rally that saw U.S. equities rise for nine consecutive weeks. He pointed to stronger-than-expected U.S. jobs data on Friday—which prompted markets to reconsider the Federal Reserve's policy path—as well as stretched positioning and questions about the funding demands of the AI cycle's next stage, as drivers of the change in sentiment late last week.
In a note sent to clients on Monday evening, analysts at Citi said that following the recent decline, positioning in U.S. equity markets was "incrementally healthier" and more balanced. Noting that Friday marked the Nasdaq Composite's steepest single-day drop since April 2025, Citi's analysts pointed to the hotter-than-expected labor market figures reinforcing expectations of potential Fed hikes later this year.
Citigroup separately raised its year-end forecast for the S&P 500 on Monday to 8,100 from 7,700, implying upside of almost 10% for the index, which has already gained more than 8% since the start of 2026.
Citi's analysts warned on Monday evening that trades made over the past week have created a "bifurcated market" that could be vulnerable to disappointing headlines. "While $14.7 billion in new shorts marked the largest weekly short build seen over the year, the simultaneous addition of $4.78 billion in new longs—with no evidence of long liquidation—highlights two distinct camps: macro-driven bears and investors maintaining strong conviction in buying AI-driven pullbacks," they said.
FAQ
What triggered the global stock market sell-off on Friday?
A downbeat earnings report from Broadcom sparked a rotation out of AI-linked stocks, leading to a sharp decline in U.S. chip stocks. The negative momentum spread to Asian and European tech stocks, with Friday marking the Nasdaq Composite's steepest single-day drop since April 2025.
What are analysts forecasting for the S&P 500 by year-end?
Edwards Asset Management is expecting the S&P 500 to reach 7,700 points by the end of the year, representing upside of around 4% from Monday's closing price. Citigroup raised its year-end forecast for the S&P 500 on Monday to 8,100 from 7,700, implying upside of almost 10% for the index.
How did South Korea's Kospi index perform on Tuesday?
South Korea's tech-heavy Kospi index jumped more than 8% on Tuesday following two days of losses, marking a significant recovery from the sell-off that began on Friday.
