Wall Street’s major indexes closed lower Friday and investors shifted away from technology to other sectors as Broadcom and Oracle fueled concerns about an AI bubble and rising Treasury yields added pressure after some policymakers spoke against easing monetary policy.
Treasury yields rose after a group of Federal Reserve officials, who voted this week against the central bank’s interest rate cut, expressed concerns that inflation remains too high to justify lower borrowing costs.
Shares of Broadcom fell after the chipmaker warned of lower future margins, sparking fresh concerns about the profitability of growing investments in AI.
That follows a nearly 11% selloff in Oracle on Thursday following the cloud software maker’s weak financial guidance. Oracle shares extended losses Friday, even after it denied a Bloomberg report that its data centers for ChatGPT maker OpenAI were delayed.
It didn’t help that the S&P 500 and Dow hit record closing highs on Thursday and investors were keeping an eye on key labor market and inflation data due next week, according to Anthony Saglimbene, chief market strategist at Ameriprise.
“It’s no surprise that the market is selling off today after a pretty strong couple of weeks,” Saglimbene said, adding that after the record close, and with “some disruption in the AI theme right now, investors are turning to some of the more defensive sectors.”
According to preliminary data, the S&P 500 lost 1.06% to end at 6,827.38 points, while the Nasdaq Composite fell 1.69% to 23,193.65 points. The Dow Jones fell 0.50% to 48,461.99 points.
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