U.S. stocks ended a volatile week lower on Friday as fears that artificial-intelligence profits would arrive too late to cover the sector’s mounting credit bills drove investors out of tech. The Nasdaq Composite fell 2.1% to 26,140.03, the S&P 500 lost 1.1% to 7,659.44, and the Dow Jones Industrial Average slipped 0.3% to 52,002.41, according to The Wall Street Journal.
For the week, the Nasdaq plunged 4.5%, snapping a four-week winning streak and marking its biggest weekly decline since the week ended June 26. The S&P 500 closed 2% lower on the week, its fourth negative result in six weeks. The Dow, boosted by a rotation into defensive stocks, rose 0.7% for its second straight weekly gain.
CoreWeave, the cloud-computing company at the center of Wall Street’s AI-credit worries, fell 12% on Friday and is down more than 50% from its highs earlier this year, bringing its weekly loss to 25%. Investors fear the company and other aspiring “hyperscalers” cannot pay down their debt fast enough as the cost of credit rises.
“Inevitably, with the cost of credit and capital rising to unaffordable levels, plans will have to be scaled back and capex reduced sooner or later,” said Lorenzo Di Mattia, founder and chief investment officer at hedge-fund firm Sibilla Capital.
The pain spread across the AI trade for the week, according to Investor’s Business Daily: Dell plunged 23%, Micron lost nearly 15%, CrowdStrike and Snowflake each sold off 17%, and Palo Alto and Cloudflare fell 18%. The semiconductor ETF tumbled 10.5%. Consumer, health care and insurance names gained as investors rotated into defensive sectors, while the small-cap Russell 2000 sank deeper into correction territory.
The 10-year Treasury yield rose to 5.097% on Friday, up from Thursday but well below Wednesday’s 5.33% high, as the stock selloff drove investors toward safer assets. The 30-year yield ended at 5.436%, still registering its biggest weekly drop in more than a year, while the two-year yield fell to 4.734%, its largest one-week retreat since August.
Federal Reserve Chairman Kevin Warsh, speaking overnight at an International Monetary Fund meeting in Bangkok, declined to give any guidance on whether another interest-rate hike is coming. According to CME FedWatch, traders now see a 17% likelihood the Fed will raise rates at its late-October meeting, down from 28% on Thursday, and an 89% likelihood of a hike at its December meeting.
Oil and gold held firm: West Texas Intermediate crude was around $98 a barrel, gold futures rose to about $4,200 an ounce, and Bitcoin traded near $82,200 after briefly dipping below $80,000 for the first time in a month.
What it means for ordinary people
A 10-year yield above 5% keeps pressure on mortgage rates, auto loans and credit-card interest — borrowing stays expensive. Sliding tech stocks weigh on 401(k)s and retirement accounts heavily invested in index funds. Oil near $100 a barrel keeps gasoline and diesel prices elevated. And with markets now pricing an 89% chance of a Fed hike in December, borrowing costs could climb higher still.
Sources: The Wall Street Journal; Investopedia; Investor’s Business Daily.
