Wall Street towards weekly loss: Wall Street saw a downturn on Friday, primarily driven by another sharp selloff in AI-linked stocks.
The S&P 500 ended marginally lower, with a steep drop in AI-related chip stocks and sharp gains in Moderna and other healthcare stocks, news agency Reuters reported.
PHLX chip index tumbled 5.3%
The PHLX chip index tumbled 5.3 per cent, underscoring recent volatility among AI-related chipmakers that have fueled much of Wall Street’s gains in recent years. While some investors remain optimistic about the potential for AI to fuel higher profits, others worry that massive spending to build AI data centers may take too long to pay off.
“It’s too early to conclude that there’s a major correction brewing in tech, but what I would say is that the questions around profitability and the capex story are certainly not going away,” said David Stubbs, chief investment strategist at AlphaCore Wealth Advisory.
Stubbs also warned that Wall Street could be vulnerable to signs that US companies may not be able to deliver on investors’ high earnings expectations.
Apple rallied 3.1 per cent and partly rebounded from a selloff on Thursday, when it raised iPad and MacBook prices, blaming soaring memory and storage chip costs.
Moderna surged almost 13 per cent to its highest level since 2024 after the drug developer hosted an investor event and showcased its pipeline.
8 of 11 S&P 500 sector indexes declined
Eight of the 11 S&P 500 sector indexes declined, led lower by industrials, down 3.41 per cent, followed by a 2.45 per cent loss in materials.
US inflation rose above 4 per cent in May, data showed on Thursday, as the Iran war drove up energy prices, keeping alive the possibility of a Fed rate hike.
“We saw a similar dynamic during the pandemic, when supply chain disruptions limited access to semiconductors. Now, we’re witnessing a comparable supply shock, this time driven by memory, which is creating renewed inflationary pressure,” Hogan said.
The S&P 500 declined 0.05 per cent to end the session at 7,353.95 points.
For the week, the S&P 500 fell 2.05 per cent and the Nasdaq lost 4.7 per cent.
The chip index lost 7.9 per cent for the week, its worst week since early April.
(With inputs from Reuters)
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