Semiconductor stocks extended their underperformance in Tuesday morning trading, sliding to the lowest since October 2020, as a sharp decline in global PC shipments added to concern about soft demand. Tech mega-caps were among top S&P 500 decliners by value.

The sector has been pummeled this year, most recently on the heels of AMD’s disappointing forecast, and with new scrutiny on US restrictions on China’s access to American tech. The S&P 500 tech sector lags the broader index on a year-to-date basis by the most in a generation.

Fresh figures from Gartner are adding to the gloom: Worldwide PC shipments sank 19.5% year-over-year in 3Q, the steepest decline since the firm started tracking the PC market in the mid-1990s. Supply chain woes have eased, but high inventory is now a significant issue due to weak demand from both consumers and businesses. 

Gartner flagged disappointing back-to-school sales in particular — even with massive promotions and price drops, as many people have new PCs purchased in the last two years. (Another wave of discounts is yet to come with holiday promotions, potentially offering the Fed some comfort as it focuses on fighting higher prices.)

In the US, PC shipments fell for a fifth quarter, sliding 17%, led by laptops. Even so, there was an encouraging sign: Desktops grew a bit, driven by small and midsize businesses and public sector. Interestingly, earlier data showed still-low US small-business optimism improved for a third month in September, with firms more upbeat about sales. It’s also worth noting aspects of AMD’s business beyond PCs, including data center growth, weren’t so bad.

In other regions, shuttered operations in Russia and lockdowns in China (unsurprisingly) hurt PC demand. And the overall economic outlook isn’t great, with the latest warnings coming from the IMF and JPMorgan’s Jamie Dimon, which will weigh on tech and other equities.

  • NOTE: Felice Maranz writes for Bloomberg’s Markets Live blog. The observations she makes are her own and not intended as investment advice. For more markets commentary, see the MLIV blog