Chip Stocks Lead a Tech Selloff as the Nasdaq Posts Its Worst Week Since June

A broad slide in technology shares dragged Wall Street lower on Friday and handed the Nasdaq composite its worst week since June, according to the Associated Press and Yahoo Finance.

The S&P 500 fell 1.1 percent to 7,659.44, leaving it down about 2 percent for the week and wiping out the gains that had carried it to a record the week before. The Nasdaq dropped 2.1 percent to 26,140.03, its first weekly loss in five weeks. The Dow Jones industrial average held up better, slipping 0.3 percent to 52,002.41. Slightly more than half the stocks in the S&P 500 fell, but the damage was concentrated in technology: all but seven of the 75 tech stocks in the index closed lower, the AP reported.

Chipmakers led the way down. Advanced Micro Devices lost 6 percent, Intel 5.8 percent, Micron 5.6 percent and Broadcom 4.5 percent. Meta Platforms fell 3.7 percent and Alphabet 2.5 percent. Yahoo Finance’s market coverage, as summarized by the news site Whatfinger, said the selling spread during the week from chip stocks to software and cybersecurity companies and left the technology sector down about 7.7 percent over five days.

The worry is less about this quarter’s profits than about financing. Companies racing to build data centers for artificial intelligence have leaned heavily on debt markets, and investors are asking whether that borrowing can continue at the same pace while bond yields sit near their highest levels in about two decades. The yield on the 10-year Treasury eased to 5.09 percent on Friday from 5.10 percent a day earlier, after topping 5.30 percent earlier this month, its highest since 2002, the AP reported.

Inflation is the other pressure. Consumer and wholesale price reports this week both came in hotter than economists expected. The Federal Reserve raised its benchmark rate by a quarter point in September, to a range of 3.75 to 4 percent, its first increase in about three years. Traders expect no change at this month’s meeting, but CME Group data cited by the AP put the odds of another increase in December at about 74 percent, up from about 50 percent a month ago. Fed Chair Kevin Warsh, speaking in Bangkok on Friday, offered no new signal on rates, according to the AP and Euronews.

Energy moved the other way. Brent crude, the international benchmark, rose 3.7 percent to settle at $109.86 a barrel, up from about $72 in late February before the war with Iran began, the AP reported. Exxon Mobil rose 2.5 percent and Chevron 2.6 percent. Strategists at ING said the oil market was pricing in a significant risk premium. The average price of gasoline in the United States was $4.33 a gallon on Friday, according to AAA, up from $3.06 a year earlier.

Not every analyst reads the week as the start of something larger. The S&P 500 was at a record only days ago, many companies that beat forecasts, such as Alcoa and Travelers, were rewarded on Friday, and a pullback after a long run is common. The question investors will carry into next week’s earnings reports is whether the spending on artificial intelligence starts to show returns quickly enough to justify the debt.