Stock markets have slumped on Wall Street as a global tech rout gathers pace. 

US stocks declined for their second day in a row on Tuesday after weeks of strong gains, driven by fears of higher interest rates from the Federal Reserve and concerns over massive spending on AI.

The Nasdaq Composite, the tech-focused stock market, sank by as much as 2.4pc, before paring some losses later in the day to end down 2.1pc. The S&P 500 declined by 1.5pc.

Elon Musk’s newly floated SpaceX fell as much as 4.8pc with shares dropping below the $150 offer price they were sold on its market debut two weeks ago.

The decline means Mr Musk’s vast fortune has fallen from $1.45tn to just under $1.1tn.

SpaceX shares ended Tuesday slightly higher, up 2.4pc, although it has done little to erase the damage from three successive days of declines which wiped $600bn off the company.   

Chipmakers also bore the brunt of heavy selling by investors, with memory card maker SanDisk posting the biggest decline on the Nasdaq, plunging 14.2pc.

Semiconductor firms Micron Technology and ASML also fell 13.9pc and 8.7pc respectively.

These stocks are key bets for investors seeking to capitalise on the AI boom.

The rout comes after the Fed meeting last week revealed that interest rate increases may be imminent to help get inflation under control.

Policymakers have also long warned that valuations appear over-stretched, raising the risk of a painful correction in tech stocks.

Wall Street’s losses were mirrored in trading sessions across Asia and Europe. 

Trading was halted on South Korea’s benchmark Kospi index after it plunged by 10pc and Japan’s Nikkei dropped 3.6pc.

Even the FTSE 100, which has a lower exposure to tech companies, fell as much as 1pc as sentiment soured.

Selling has been driven by concerns about valuations and performance in the tech sector, which has soared so far this year thanks to excitement about AI and space exploration.

Stephen Innes of SPI Asset Management said: “The market is not simply marking down an earnings number; it is questioning the duration of the entire earnings machine behind it.”

Despite the Wall Street sell off, ⁠Barclays has raised its estimate of where it thinks the benchmark S&P 500 will end the year.

The UK bank upped its year-end target for the index to 7,800, pointing to strength ‌in corporate earnings.

The S&P 500 is up 7.5pc so far ‌this ‌year, broadly ⁠driven by AI optimism, while the US-Iran peace deal has also boosted investor sentiment.

Barclays’ target is about 4.4pc higher than the index’s last close of 7,472.79. The S&P 500 has fallen 0.7pc to 7,418.65 in early trading today.

Analyst Venu Krishna said: “The equity bull case remains intact.”

Elsewhere, the FTSE 100 ended the day with a slight decline of 0.1pc. 

Meanwhile, the pound fell by 0.5pc against the dollar, as traders seek to parse the signals from Andy Burnham’s camp about his plans for when in office.

The newly elected Makerfield MP is understood to be demoting Chancellor Rachel Reeves in favour of one of his allies.

Wes Streeting, Ed Miliband and Shabana Mahmood are thought to be top contenders.