The sell-off on the winners of the artificial intelligence boom deepened Friday, sending stock markets around the world lower. Meanwhile, oil prices continued to soar due to the war with Iran.
The Standard & Poor’s 500 index fell 1%, ending its first losing week in the past three weeks and falling for the third time since late March. Two days ago, it rose to within 0.5% of its all-time high.
The Dow Jones Industrial Average fell 406 points, or 0.8%, and the Nasdaq Composite Index fell 1.4%.
Semiconductor stocks and other AI-related stocks were once again at the center of volatile trading. They have been under pressure for weeks over concerns that strong demand for computer memory and processors could become unsustainable if prices rise too high and AI ends up delivering less profits and productivity than promised.
Nvidia fell 2.2%, making it the largest stock in the S&P 500 index. Recent losses forced it to briefly relinquish its No. 1 spot as Wall Street’s most valuable company on Friday, but it once again ended the day ahead of Apple.
Applied Materials fell 5.6%, capping its gain for the year to 106%. Micron Technology fluctuated between a 5.8% decline and a 3.2% rise before falling 0.5%.
Early in the morning, tech stocks sold around the world. Shares of Taiwan Semiconductor Manufacturing Co., Ltd. and others fell 7.3%, with the Taipei market down 6.5%, the Tokyo market down 4%, and the Shanghai market down 3%.
South Korea’s stock market was closed for the holiday, providing a temporary respite. It is at the center of the AI movement because it is dominated by two giant technology companies: Samsung Electronics and SK Hynix. Last week alone, Seoul’s Kospi stock index rose 6.2% on one day, and fell 6.4% and 8.9% on the other two days.
The news of Kimi K3, a powerful Chinese AI model by startup Moonshot, further shook the market. Another low-cost rival to big Western AI models, such as ChatGPT and OpenAI, could hurt demand for computer chips and other components, as China’s DeepSeek did when it unveiled its AI model in early 2025.
European stock indexes, which are less heavily weighted toward AI and technology, performed calmly.
Several stocks fell after the latest earnings reports, adding to the pressure on Wall Street. Companies are under pressure to deliver strong growth heading into the spring to justify the already big gains in stock prices.
Netflix fell 7.3% as its latest quarter’s revenue fell slightly below analysts’ expectations, even though profits beat expectations. Sales and profit forecasts for this summer were also lower than expected.
Intuitive Surgical, a maker of robotic surgical systems, fell 14.1% despite beating expectations in its latest quarter. Analysts cited concerns that the expiration of enhanced tax credits that helped lower health insurance premiums for many Affordable Care Act participants could slow growth in procedures.
Elon Musk’s SpaceX fell 5.4%, hitting its lowest price since its shares began trading on the Nasdaq more than a month ago. The company, which owns the xAI business, has been caught up in the volatility in AI stocks, and on Thursday had to abort a test flight of its massive Starship rocket less than a second after launch.
Overall, the S&P 500 fell 76.08 points to 7,457.69. The Dow Jones Industrial Average fell $406.55 to $52,146.42, and the Nasdaq Composite Index fell $361.70 to $25,520.24.
Further increases in oil prices also weighed on the stock market.
The price of international standard Brent crude oil per barrel settled at $88.10, up 4.6% from about $76 a week ago.
The United States expanded its air campaign against Iran early Friday, hitting more bridges and toppling towers at Iran’s main ports. This has further heightened concerns about whether oil tankers will be able to use the Strait of Hormuz to transport crude from the Persian Gulf to customers around the world.
Rising oil prices are pushing up yields on U.S. Treasuries in the bond market, threatening to slow the economy and lower the prices of stocks and all other types of investments. Rising yields have already pushed the average interest rate on a 30-year mortgage to its highest level in about a year.
But long-term Treasury yields fell on Friday. The yield on the 10-year U.S. Treasury note fell to 4.55% from 4.57% late Thursday.
The report suggested that while future inflation expectations have receded, U.S. consumer sentiment has improved more than economists expected. This is important for the Fed, which is considering raising interest rates to rein in inflation.
If inflation expectations remain fixed, this will prevent a vicious cycle in which people act in anticipation of higher inflation, causing further inflation.
Cho writes for The Associated Press.
