U.S. stock markets closed lower on Friday, marking the worst week for equities since late June, largely driven by a broad sell-off in the technology sector. The decline erased gains made the previous week when the S&P 500 reached an all-time high.
The S&P 500 fell 1.1% on Friday and ended the week with an approximate 2% loss. The Nasdaq Composite, which is heavily weighted toward technology companies, dropped 2.1%, recording its first weekly decline in five weeks and its steepest weekly drop since June. The Dow Jones Industrial Average was more resilient, finishing 0.3% lower.
More than half of the stocks in the S&P 500 declined during the session, with the technology sector particularly hard hit. Among the 75 tech stocks in the index, all but seven ended the day lower. Semiconductor companies faced significant pressure amid concerns about the sustainability of the current surge in artificial intelligence (AI) investment. Notable declines included Micron Technology, which dropped 5.6%, Advanced Micro Devices (AMD) down 6%, Broadcom off 4.5%, and Intel declining 5.8%.
Other prominent technology firms also saw losses, with Meta shares falling 3.7% and Alphabet, Google’s parent company, down 2.5%. Tesla’s shares declined 2.1% following the unveiling of a new Roadster sports car model that can lift itself off the ground.
The sell-off in technology stocks reflects investor worries about the future pace of investment in AI-related hardware and software. Many companies in this sector have financed their rapid expansion through debt markets, but recently rising bond yields worldwide have raised concerns about the cost and availability of further borrowing.
Despite pressure on tech shares, some sectors performed better. Energy stocks outperformed, with ExxonMobil gaining 2.5% and Chevron adding 2.6%. Shares of industrial companies Alcoa and The Travelers Companies rose after posting quarterly results exceeding Wall Street expectations.
In fixed income markets, Treasury yields remained relatively stable. The 10-year U.S. Treasury yield declined slightly to 5.08% from 5.10% the previous day, after reaching levels not seen since 2002 earlier this month. This elevated yield environment has been driven by concerns over persistent inflation and signals of a robust U.S. economy.
Recent inflation reports indicated higher-than-expected price increases at both the consumer and wholesale levels, fueling speculation that the Federal Reserve might raise interest rates before the end of the year. The central bank raised its benchmark interest rate by a quarter-point to about 3.9% in September, its first increase in three years. While traders widely expect rates to remain unchanged in the policy meeting this month, the likelihood of a rate hike in December has risen to more than 74%, compared to roughly 50% a month ago.
Federal Reserve Chairman Kevin Warsh, attending a gathering of financial leaders in Bangkok on Friday, did not provide new insights regarding future monetary policy moves.
Amid these market fluctuations, investors are closely watching the ongoing earnings season, which began this week, with expectations for profit growth across various industries remaining high despite inflationary pressures and broader economic uncertainties.