US markets closed sharply lower on Friday, driven by renewed pressure on AI-related technology stocks and a surge in oil prices. CoreWeave, Broadcom, and other AI infrastructure companies faced heightened concerns over their ability to generate profits in time to cover debts, especially with rising borrowing costs. The Nasdaq Composite dropped 573 points, or 2.2 percent, to 26,140, extending losses from earlier in the week. The S&P 500 fell 84 points, or 1.1 percent, to 7,659, while the Dow Jones Industrial Average declined 175 points, or 0.3 percent, to 52,002.
Investors were also spooked by a more than three percent jump in oil prices due to supply worries in the Middle East. Rob Haworth, senior investment strategist at US Bank Wealth Management, noted that high oil prices tend to weigh on stock valuations, prompting investors to adopt a cautious stance heading into the weekend.
Adding to the uncertainty, some current and prospective investors of Anthropic are considering a lower valuation for the company ahead of its upcoming IPO, according to a Reuters report. Meanwhile, third-quarter earnings season kicks off next week with reports from Tesla, Meta Platforms, and Procter & Gamble. Analysts expect quarterly earnings to surge over 30 percent, driven by AI-related megacaps.
Despite the recent volatility, the S&P 500 remains up about 12 percent in 2025, largely due to gains in AI-related tech stocks. Hotter-than-expected inflation reports this week indicated that price pressures are extending beyond energy commodities. Federal Reserve Chair Kevin Warsh expressed optimism about US economic strength, noting how well global economies have weathered the energy shock and tighter monetary policy. Markets now anticipate the Fed will keep interest rates unchanged this month, though Barclays predicts 25-basis-point hikes in December and January.
Tesla shares dropped after the company unveiled a redesigned Roadster, featuring rocket-style thrusters developed in collaboration with SpaceX.