The Nasdaq Composite fell 1.1% on Friday while the Dow Jones Industrial Average rose, as traders rotated out of tech and AI-related stocks. Chipmakers and other AI-linked stocks fell, and the Nasdaq is down about 3% on the week.
The Nasdaq Composite shed 1.1% on Friday, while the Dow gained 129 points, or 0.3%. The S&P 500 traded down 0.4%, as stocks headed for a mostly losing week amid a rotation out of tech and artificial intelligence-related names.
The Nasdaq has shed about 3% this week, the S&P 500 is down almost 1%, and the Dow has moved higher by more than 1%.
Chipmakers and AI debt weigh on tech
Chipmakers fell again. The VanEck Semiconductor ETF lost 1%, led by declines in Micron Technology, Advanced Micro Devices and Sandisk, and it is down 8% week to date. Semiconductors have struggled this week amid jitters about competition from China.
Investors have also grown concerned that tech companies are borrowing too much for the AI buildout. CoreWeave, whose total debt has risen to more than $51 billion, fell around 9% and is down more than 22% on the week.
Michael Rosen, Angeles' chief investment officer, said increased debt issuance is something to watch, but that levels are not remotely close to excessive right now.
Inflation and the Fed keep investors cautious
Investors are also grappling with hotter-than-expected inflation data, which elevated energy prices in the wake of the U.S.-Iran war have exacerbated. Wholesale inflation this week saw its biggest gain since 2022.
Fed Chairman Kevin Warsh spoke at an IMF event in Bangkok overnight. He did not comment on whether the Fed would raise rates before year-end, and traders took that as a sign that the central bank will hold policy steady later this month. The CME Group's FedWatch tool points to an 85% chance that the Fed keeps its overnight rate unchanged at its Oct. 27-28 meeting.
Not every sector fell. JPMorgan advanced around 2%, and Nike and Merck each climbed around 1%, which added to the Dow's rise.
Source: CNBC
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