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Wall Street’s major indexes closed lower on Friday, and investors left technology for other sectors as Broadcom and Oracle fueled concerns about an AI bubble and rising U.S. Treasury yields added pressure after some policymakers spoke out against easing monetary policy.
The Dow Jones Industrial Average tumbled 245 points, or 0.5%, to 48,458. The S&P 500 dropped 1.1%, and the Nasdaq lost almost 400 points, or 1.7%.
The blue-chip index had risen nearly 200 points to 48,886, a new all-time intraday record.
Treasury yields rose after a group of policymakers who voted against the Fed’s interest rate cut this week said they are worried that inflation remains too high to warrant lower borrowing costs.
Broadcom shares fell 11% after the chipmaker warned of slimmer future margins, causing renewed concerns about the profitability of surging AI investments.
The report followed a nearly 11% sell-off in Oracle on Thursday after the cloud software company unveiled a weak forecast. Oracle shares were down another 4.5% on Friday even after it denied a Bloomberg report that its data centers for ChatGPT maker OpenAI were being delayed.
Friday’s weakness was compounded by record closing highs for the S&P 500 and the Dow on Thursday and the prospect of an important labor market and inflation economic data due out in the week ahead, according to Anthony Saglimbene, chief market strategist at Ameriprise.
“It’s not surprising that the market’s selling off today after a pretty solid couple weeks,” said Saglimbene, adding that following record closes, and with “some disruption in the AI theme right now, investors today are looking at some of the more defensive sectors.”
The Labor Department’s reports on non-farm payrolls, consumer inflation and retail sales data are due next week and may offer greater insight into the economy’s health after the October government shutdown starved investors and policymakers of official data releases.
“The market is probably a little bit cautious on heading into those big numbers next week,” said the strategist.
Other chip stocks, including heavyweight AI leader Nvidia also were dragged down.
Friday’s losses erased weekly gains for the S&P 500 and the Nasdaq, while the Dow and the Russell 2000 held gains garnered after the Fed trimmed borrowing costs and delivered a less hawkish outlook than investors had feared on Wednesday.
Traders are pricing in a total of 50 basis points of rate cuts by the end of 2026, which is one more than the Fed signaled on Wednesday.
Lululemon Athletica jumped nearly 10% after the apparel maker raised its annual profit forecast and said that CEO Calvin McDonald was leaving the company.
Costco Wholesale shares flat after it beat Wall Street estimates for first-quarter revenue and profit as consumers snapped up affordable essentials and nice-to-have items at its stores ahead of the crucial holiday season. It was the biggest percentage decliner in the staples sector.