Tech Sector Sell-Off Pulls Wall Street Markets Down
A drop in tech stocks driven by concerns over artificial intelligence spending and rising bond yields led to Wall Street's worst week since late June.
A broad-based sell-off in tech companies on Wall Street dragged down stocks, capping the market's worst week since late June.
Current Status of Wall Street Indices
The S&P 500 index fell 1.1% and wiped out the previous week's record-high gains with a weekly decline of about 2%. The Nasdaq Composite index dropped 2.1%, ending a five-week winning streak and posting its worst week since June. Meanwhile, the Dow Jones Industrial Average showed more resilience, closing down 0.3%.
Declines in Chip and Tech Stocks
Concerns over how long artificial intelligence infrastructure investments will last triggered sharp declines in chip companies. Micron Technology fell 5.6%, Advanced Micro Devices dropped 6%, Broadcom lost 4.5%, and Intel declined 5.8%. Other tech companies experiencing drops included Meta, which fell 3.7%, and Alphabet, Google's parent company, which dropped 2.5%.
Investor Concerns Over Borrowing
Investors are jittery over concerns that tech companies relying on debt markets to finance AI investments may struggle to borrow due to climbing bond yields. Meanwhile, Netflix shares fell 2.9% following the announcement that Peter Rice would replace Chief Content Officer Bela Bajaria and plans to lay off about 6% of its workforce.
Energy Markets and Global Outlook
Energy stocks performed better, with Exxon gaining 2.5% and Chevron rising 2.6%. European and Asian stock markets closed the day higher, while the yield on the 10-year Treasury note in the bond market retreated to 5.09%. Wall Street traders raised the probability of a Federal Reserve rate hike at its December meeting to 74.3%, up from 50.2% a month earlier.
Increase in Oil Prices
In energy markets, Brent crude rose 3.7% to close at $109.86 a barrel as ongoing conflicts and tensions involving Iran kept global oil supplies under pressure.