Wall Street wrapped up its worst week since June with more losses. The S&P 500 fell 1.1 per cent on Friday, and its roughly 2 per cent drop for the week erased the previous week's gains, when it set an all-time high. The Nasdaq composite, heavily weighted with technology stocks, sank 2.1 per cent for its first weekly loss in five weeks and its worst since June. The Dow Jones Industrial Average closed 0.3 per cent lower.
Slightly more than half of the stocks in the S&P 500 fell, but all but seven of the 75 stocks in the index's tech sector closed lower. Chip companies were among the biggest decliners, reflecting mounting worries about how long the frenzy over the AI buildout will last. Micron Technology fell 5.6 per cent, Advanced Micro Devices dropped 6 per cent, Broadcom lost 4.5 per cent and Intel gave up 5.8 per cent. Meta fell 3.7 per cent and Google parent Alphabet dropped 2.5 per cent.
Investors are concerned that companies central to the artificial intelligence industry, which have relied on debt markets to finance an investment spree, may not be able to keep borrowing and spending as heavily with bond yields worldwide climbing to their highest levels in years. The yield on the 10-year Treasury slipped to 5.09 per cent from 5.10 per cent late Thursday, having topped 5.30 per cent earlier this month, its highest level since 2002.
Netflix fell 2.9 per cent a day after announcing that Chief Content Officer Bela Bajaria will be replaced by Peter Rice, and days after saying it plans to lay off about 6 per cent of its workforce, nearly 1,000 positions.
Energy stocks held up better, with Exxon rising 2.5 per cent and Chevron adding 2.6 per cent. Alcoa rose 2.5 per cent and The Travelers Cos. gained 1.5 per cent after quarterly results topped Wall Street forecasts. Tesla fell 2.1 per cent after unveiling a new model of its Roadster sports car. European and Asian markets closed higher.
Inflation reports this week showed US consumer and wholesale prices rose more than economists expected. The Federal Reserve raised its key interest rate by a quarter-point to about 3.9 per cent in September, its first increase in three years. Traders expect the Fed to keep its short-term rate unchanged at its meeting this month, but the odds of a rate increase at the December meeting have jumped to 74.3 per cent from 50.2 per cent a month ago, according to CME Group data. Fed Chairman Kevin Warsh offered no fresh signals on rate policy while attending a meeting of financial leaders in Bangkok.
Oil prices remained elevated as global supply stays under pressure without a deal between the US and Iran to end the Iran war. Brent crude, the international standard, jumped 3.7 per cent to settle at US$109.86 per barrel, up from around US$72 in late February before the war began. The US national average for gasoline is US$4.33 a gallon, sharply higher than US$3.06 a year ago. ING commodities strategists Warren Patterson and Ewa Manthey wrote that uncertainty in the Middle East and concerns over oil flows in the Strait of Hormuz had the market 'pricing in a significant risk premium.'
In final trading, the S&P 500 fell 84.62 points to 7,659.44. The Dow dropped 175.28 points to 52,002.41, and the Nasdaq declined 572.99 points to close at 26,140.03.