US Markets Are Weighed down by an Extended Sell-off in the Tech Sector

The U.S. stock markets experienced a decline on Friday due to a prolonged sell-off primarily affecting technology companies. This downturn marked the worst week for the stock market since late June, with the S&P 500 falling 1.1% and the Nasdaq composite sinking 2.1%. The Dow Jones Industrial Average, however, only saw a slight drop of 0.3%.

Over half of the S&P 500 stocks fell, with most of the decline originating from tech sector stocks. Leading the decline were chip companies such as Micron Technology, Advanced Micro Devices, Broadcom, and Intel, all of which saw significant drops in their stock prices. Other notable losers included Meta and Alphabet. The sell-off was attributed to concerns about the sustainability of the AI industry investment surge, as well as rising bond market yields, which have reached their highest levels in years.

Despite these challenges, energy stocks performed relatively well, with Exxon and Chevron both showing gains. Bond market yields, especially the 10-year Treasury yield, remained stable, hovering around 5.09%. Inflation reports indicated higher-than-expected increases, which could lead the Federal Reserve to hike interest rates sooner than expected.

This uncertainty in interest rate policy further added to the market's anxiety. Meanwhile, other sectors also reported varying performances, with companies like Tesla and Alcoa experiencing declines although they had reported better-than-expected quarterly results. The broader market sentiment remained cautious, with the S&P 500 closing at 7,659.44, the Dow Jones at 52,002.41, and the Nasdaq at 26,140.03.

Oil prices, particularly Brent crude, continued to trade higher, reaching $109.86 per barrel, reflecting ongoing geopolitical tensions and supply constraints. Gasoline prices, while slightly lower than the previous month, still remained notably higher compared to the same period last year.