U.S. stocks ended lower on Friday, with investors dumping technology stocks and taking refuge in value assets as concerns grew over an AI bubble and Treasury yields rose after some Federal Reserve policymakers raised concerns over risks of lower borrowing costs. All three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 0.5% or 245.96 points, to close at 48,458.05 points.
The S&P 500 slipped 1.1%, or 73.59 points, to finish at 6,827.41 points. Tech, energy and industrial stocks were the worst performers.
The Information Technology Select Sector SPDR (XLK) declined 2.9%, while the Industrials Select Sector SPDR (XLI) gave up 0.6%. However, the Consumer Discretionary Select Sector SPDR (XLY) and Consumer Staples Select Sector SPDR (XLB) gained 0.4% and 0.8%, respectively. Six of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq fell 1.7%, or 398.69 points, to end at 23,195.17 points.
The fear gauge, CBOE Volatility Index (VIX), was up 5.99% to 15.74. Decliners outnumbered advancers on the NYSE by a 2.23-to-1 ratio. On the Nasdaq, a 2.34-to-1 ratio favored declining issues. A total of 18.08 billion shares were traded on Friday, higher than the last 20-session average of 17.25 billion.
On the Nasdaq, there were 136 new 52-week highs and 98 new lows. On the S&P 500, there were 32 new 52-week highs and five new lows.
Concerns Grow Over AI Bubble
Tech shares retreated on Friday as concerns over a potential AI bubble grew, compelling investors to dump high-flying stocks. Concerns grew as investors worried over the profitability of the ongoing surge in AI investments.
The decline came, with shares of Broadcom, Inc. (AVGO) declining 11.4% despite the company beating on earnings and giving a solid forecast for the ongoing quarter. Broadcom reported fourth-quarter fiscal 2025 earnings of $1.95 per share, beating the Zacks Consensus Estimate of $1.87 per share.
Shares of other big names focused on AI also saw their shares take a hit. Shares of Advanced Micro Devices, Inc. (AMD) declined 4.8%, while Palantir Technologies Inc.’s (PLTR) ended 2.1% lower. Palantir has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Treasury Yields Rise
Investors have been worried about the future of AI stocks lately. The move comes after the Federal Reserve slashed interest rates by a quarter percentage point earlier in the week for the third time this year.
Treasury yields rose on Friday after some Federal Reserve officials, especially those who had voted against the latest rate cut, warned that inflation remains elevated and lower borrowing rates could make the situation difficult.
This further dented investors’ sentiment. No major economic data was released on Friday.
Weekly Roundup
Despite Friday’s losses, the Dow ended the week with gains. The blue-chip index finished the week 1.1% higher.
The Nasdaq and the S&P 500, however, ended the week 1.6% and 0.6% lower, respectively.
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Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis Report Palantir Technologies Inc. (PLTR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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