The BrainChip Holdings Ltd (ASX: BRN) share price kicked off the week deep in the red on Monday.
Shares in the artificial intelligence (AI) start-up were down 5.44%, swapping hands for 69.5 cents apiece at the close of trade.
Other ASX tech shares closed lower, too, including Life360 Inc (ASX: 360), which slid 1.91% today, and Block Inc CDI (ASX: SQ2), which lost 2.70% in afternoon trade.
At a broader level, the S&P/ASX 200 Index (ASX: XJO) was also not off to a great start to the week, down 0.42% at the close.
So why did BrainChip shares — and much of the broader market — have such a lousy day? Let's investigate.
What's going on with the BrainChip share price?
What might be surprising is the absence of announcements from BrainChip to support a dive in its share price this afternoon.
However, there appears to be a sense of trepidation in the United States' equities market that might be bleeding over into ASX tech shares.
The Nasdaq Composite Index (NASDAQ: .IXIC) has lost 0.27% since 18 November. The slip comes as the market holds its breath in anticipation of the Federal Reserve releasing a handful of economic reports later this week.
The reports will include the US personal consumption expenditures price index for October, and monthly employment figures for November, among others.
This week may see a watershed moment for equities
The release of these reports may help confirm some experts' feelings that the US economy is cooling down. It was reported earlier this month that the US consumer price index (CPI) beat analyst forecasts, rising just 0.4% from September, which should be a bullish signal by all accounts.
However, the situation is not black and white. Although inflation appears to be falling, a softer labour market and reduced personal consumption could indicate that the US is heading toward or is already in, a recession. This would likely lead to a steeper sell-off in the equities market in the near future.
The flip side is that if these reports show that the US economy is still overheated, it may prompt the Fed to continue with an anticipated fifth consecutive 0.75% rate hike. This would put further pressure on stocks and keep worsening the odds of it performing a soft landing of the economy.
BrainChip investors could therefore be waiting on the sidelines to witness the release of these reports, as well as see if the Fed will continue with its aggressive monetary policy or change to a more dovish tune.
BrainChip share price snapshot
The BrainChip share price is up 2.21% year to date. It has performed better than the broader market this year, with the ASX 200 down 2.89% over the same period.
The company's market capitalisation is around $1.2 billion.
