US stock: S&P 500 ends lower as investors weigh data, Middle East tensions
The S&P 500's streak came to an end, falling from its peak as weaker retail sales suggested caution among consumers. Despite a strong outlook, Applied Materials saw its shares slump, dragging down AI-related stocks. In contrast, rising oil prices helped lift the energy index. Reddit experienced a surge following news of its index inclusion.
The S&P 500 finished lower on Friday following a record high, impacted by Applied Materials and retail sales data that fell short of expectations. Applied Materials plummeted after its optimistic quarterly outlook did not satisfy investors; its shares have doubled in 2026 due to robust demand from AI data centers. Chip manufacturers, including Broadcom and Intel, also declined on Friday.
Market participants are worried about the elevated valuations of AI stocks, leading to a sell-off for companies like Applied Materials, which reported strong earnings but had high expectations. The Strait of Hormuz saw no significant movement as two additional ships were hit, prompting the U.S. to state it could enforce a naval blockade of Iran indefinitely.
This added to the market's apprehension after a senior Iranian official claimed on Wednesday that no advancements were made in the negotiations surrounding the June agreement to cease the conflict. The energy sector of the S&P 500 index rose as oil prices spiked. The social media platform Reddit gained popularity after being added to the S&P 500 index, effective August 18.
July retail sales data disappointed, with a smaller-than-anticipated 0.2% increase in June, according to the Commerce Department's Census Bureau. The S&P 500 slipped 13.41 points, or 0.17%, to 7,785.58, while the Nasdaq Composite dropped 73.86 points, or 0.28%, to 26,729.16. The Dow Jones Industrial Average decreased by 108.53 points, or 0.20%, to 53,732.53.
Although high oil prices resulting from inflation pose a concern, recent economic indicators suggest that the Federal Reserve will likely maintain interest rates unchanged during the September meeting, with a 67% probability, according to CME's FedWatch. The University of Michigan's preliminary consumer sentiment survey in August fell below expectations, with a score of 51 compared to the anticipated 54.5.
Corporate earnings within the S&P 500 have surged by 52% in the second quarter, with Amazon, Microsoft, and other AI-focused companies contributing significantly to this growth, as reported by LSEG. Workday saw a significant drop after a Reuters report revealed that private equity firm Silver Lake was discussing a potential acquisition of the software company.
Shares of certain drone manufacturers increased after President Donald Trump announced late on Thursday his intention to impose tariffs on imports of drones and their components. Red Cat and Unusual Machines also experienced gains.
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