US stock indexes ended Friday on a down note, with the tech sector leading the decline. The S&P 500 dropped 1.1%, wiping out gains from the previous week when it hit an all-time high. The Nasdaq composite, heavily weighted with tech stocks, fell 2.1%, marking its first weekly loss in five weeks. The Dow Jones Industrial Average fared slightly better, closing just 0.3% lower.
Chipmakers and other tech companies faced significant sell-offs, reflecting growing concerns about the sustainability of the AI-driven investment boom. Micron Technology, Advanced Micro Devices, Broadcom, and Intel all saw sharp declines, with drops ranging from 4.5% to 6%. Other major tech players like Meta and Alphabet also closed lower, down 3.7% and 2.5% respectively. Investors are worried that rising bond yields could limit the ability of these companies to borrow and spend heavily on AI development.
Netflix’s stock fell 2.9% after announcing a leadership change in its content division and plans to lay off about 6% of its workforce. Meanwhile, energy stocks held up better, with Exxon and Chevron rising 2.5% and 2.6% respectively. European and Asian markets closed higher, while Treasury yields remained relatively steady, with the 10-year yield slipping slightly to 5.09%. Despite recent inflation reports, the Federal Reserve has not signaled further rate hikes, though traders now see a 74.3% chance of an increase in December.
Oil prices remained elevated due to ongoing supply pressures, with Brent crude jumping 3.7% to $109.86 per barrel. The national average for gasoline stood at $4.33 a gallon, significantly higher than a year ago. Analysts noted that oil markets are pricing in a risk premium due to uncertainties in the Middle East and concerns over oil flows in the Strait of Hormuz.