Wall Street’s main indexes dropped on Friday, as technology stocks came under renewed selling pressure, while hawkish comments from Federal Reserve officials deepened doubts about an interest rate cut in December.
Worries about stretched AI stock valuations have led to several bouts of selloff in recent weeks and put the Nasdaq on course for its fifth session of declines, the index’s longest losing streak since April. It was also poised for a second consecutive week of losses.
“People have seen the over valuation story, it has been there for a while, but they are finally acting on it … momentum trade is starting to unwind,” said Joe Saluzzi, partner and co-founder at Themis Trading.
“When it does go down like you’re seeing this morning, they’re going to take them all out. There’s no safety trade there.”
Applied Materials shares dropped 6.3% to the bottom of the S&P 500 after the company flagged expectations of weaker China spending next year on tighter U.S. export control curbs. Most semiconductor-linked stocks fell and the broader index shed 3%.
Megacap technology stocks were lower, with the Roundhill Magnificent Seven ETF down 2%. Information technology stocks on the S&P 500 also lost 2%.
The three major U.S. stock indexes posted their steepest one-day declines in over a month in the previous session.
Wall St tumbles as tech selloff continues
At 9:36 a.m. ET, the Dow Jones Industrial Average fell 568.05 points, or 1.24%, to 46,889.17, the S&P 500 lost 73.29 points, or 1.09%, to 6,664.20 and the Nasdaq Composite lost 317.39 points, or 1.44%, to 22,552.96.
The CBOE Volatility Index Wall Street’s fear gauge, touched a one-week high earlier and was last up 3 points at 23.
Meanwhile, a growing number of Fed policymakers signaled reticence on further easing. St. Louis President Alberto Musalem urged caution, while Cleveland’s head, Beth Hammack, said restrictive policy would help tackle inflation. Minneapolis’ Neel Kashkari on Thursday told Bloomberg News he had been against October’s rate cut.
Expectations for a 25 point rate cut in December fell to 53% from last week’s 67%, according to CME Group’s FedWatch tool.
Investors will parse through a fresh set of commentary from Fed officials through the day.
The historic U.S. government shutdown, which ended on Thursday, led to an economic data drought, leaving the Fed and traders flying blind and rekindled concerns about the health of the labor market and the inflation outlook.
Despite the reopening, data gaps are likely to be permanent with the White House casting doubt on some reports for October ever being released.
On the trade front, the Swiss government said that U.S. tariffs on Swiss goods will be reduced to 15% from 39%.
Among others, Walmart fell 2.2% after announcing that CEO Doug McMillon would retire next year.
Warner Bros Discovery gained 2.4%. The entertainment company said it had amended CEO David Zaslav’s employment agreement amid a strategic review of its business.
Cidara Therapeutics more than doubled after Merck said it will acquire the company in a nearly $9.2 billion deal.
Declining issues outnumbered advancers by a 2.86-to-1 ratio on the NYSE and by a 3.8-to-1 ratio on the Nasdaq.
The S&P 500 posted seven new 52-week highs and six new lows, while the Nasdaq Composite recorded 8 new highs and 186 new lows.
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