U.S. stock markets closed lower on Friday, led by declines in major technology companies amid growing uncertainty around the artificial intelligence (AI) sector. The S&P 500 fell 1.1 percent, while the Nasdaq composite dropped 2.1 percent, marking their worst weekly performance since June. The Dow Jones Industrial Average declined 0.3 percent.
Technology stocks, particularly semiconductor firms, were the main contributors to the downturn. Micron Technology’s shares slid 5.6 percent, and Intel’s stock declined 5.8 percent as concerns mounted over the sustainability of the AI-driven spending spree in the context of rising borrowing costs. Investors are increasingly cautious about big tech companies’ capacity to continue financing their investments through debt amid rising global bond yields, which have reached multi-year highs.
Netflix shares also fell 3 percent after announcing leadership changes, with Peter Rice set to replace Chief Content Officer Bela Bajaria. This development follows the company’s recent announcement of plans to reduce its workforce by nearly 1,000 employees, or about 6 percent of its total staff.
Energy stocks bucked the broader market trend, with ExxonMobil rising 2.2 percent and Chevron gaining 2.4 percent. Elevated oil prices continue to support energy companies amid ongoing geopolitical tensions. Brent crude oil settled at $109.86 per barrel, up 3.7 percent, driven largely by supply pressures due to the unresolved conflict involving Iran. The commodity recently surpassed the $100 mark for the first time since July, reflecting persistent uncertainties about oil flows through the strategic Strait of Hormuz. The national average price for gasoline stood at $4.33 per gallon, down slightly from the previous month but significantly above levels seen a year ago.
In the bond market, Treasury yields remained mostly steady, with the 10-year Treasury yield edging down to 5.09 percent from 5.10 percent Thursday. Earlier this month, the yield had peaked above 5.30 percent, hitting its highest point since 2002 amid concerns over inflation and strong economic signals. Despite higher-than-expected inflation readings recently released by the U.S. government, yields have moderated somewhat.
These inflation reports have increased expectations that the Federal Reserve may raise interest rates again before the end of the year. The central bank raised its benchmark rate by a quarter-point to around 3.9 percent in September, the first increase in three years. Market participants largely anticipate no change at the Fed’s upcoming policy meeting this month, but the likelihood of a rate hike in December has risen from 50.2 percent last month to 74.3 percent, according to CME Group data. Federal Reserve Chairman Kevin Warsh provided no new guidance on interest rate policy during a financial conference in Bangkok on Friday.
Among other notable moves, Tesla shares dropped 3.3 percent following the unveiling of a new Roadster sports car capable of propelling itself into the air. Meanwhile, Alcoa and The Travelers Company stocks rose 2 percent and 1.6 percent, respectively, after reporting quarterly earnings that surpassed analyst expectations.
The current corporate earnings season has generated optimism about profit growth across various sectors, which has helped U.S. equities reach record highs despite ongoing inflationary pressures and other market concerns.