Wall Street closed sharply lower on Friday, pulled down by tech and discretionary stocks. Artificial intelligence (AI)-driven chip selloff intensified, prompting risk-off sentiment among investors amid geopolitical tensions. All of the three benchmark indexes firmly ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.8%, or 406.55 points, to close at 52,146.42. Twenty-three components of the 30-stock index ended in the negative territory, while seven ended in the positive.
The tech-heavy Nasdaq Composite slid 361.7 points, or 1.4%, to close at 25,520.24.
The S&P 500 lost 76.08 points, or 1%, to close at 7,457.69. Ten of the 11 broad sectors of the benchmark index closed in the red. The Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) declined 2.4%, 1.6% and 1.1%, respectively, while the Energy Select Sector SPDR (XLE) advanced 1.2%.
The fear gauge CBOE Volatility Index (VIX) increased 12.2% to 18.77. A total of 17.55 billion shares were traded on Friday, lower than the last 20-session average of 20.87 billion. Decliners outnumbered advancers by a 1.94-to-1 ratio on the NYSE and by a 1.76-to-1 ratio on the Nasdaq.
Wall Street Retreat Deepens as AI Pullback Fuels Broad Market Selloff
Wall Street extended its losses on Friday as a sharp pullback in AI-related stocks triggered a broader wave of risk aversion across the market. Investors grew increasingly cautious after the sector that had powered much of this year’s rally lost momentum, weighing heavily on overall sentiment.
The selling pressure began in semiconductor shares before spreading to other growth-oriented sectors, including technology and consumer discretionary. As the session progressed, investors reduced exposure to riskier assets, leading to widespread declines across major U.S. indexes.
The market’s weakness reflected a shift in investor sentiment. After months of strong gains fueled by enthusiasm surrounding AI, traders opted to lock in profits and reassess valuations. The broader retreat highlighted how dependent recent market strength had become on AI-driven optimism, leaving equities vulnerable when confidence in the theme weakened.
Consequently, Meta Platforms, Inc. META and Alphabet Inc. GOOGL advanced 2.8% and 2.2%, respectively. While META carries a Zacks Rank #3 (Hold), GOOGL boasts a #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
