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NEW YORK (AP) — More sell-offs for computer chip companies and other winners of the artificial-intelligence technology boom are yanking stock markets lower Friday. Oil prices, meanwhile, continue to climb because of the war with Iran.
The S&P 500 dropped 1.3% and was on track to close out its first losing week in the last three and just its third losing week in the last 16. The Dow Jones Industrial Average was down 451 points, or 0.9%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 2.1% lower.
Chip stocks once again were at the center of the weakness. They’ve been under pressure for weeks on worries that their prices shot too high and that voracious demand for computer memory and processors may not be sustainable if AI ends up not producing as much profit and productivity as promised.
Nvidia was the heaviest weights on the S&P 500 after falling 3.4%.
Applied Materials sank 6.9% to trim its surge for the year so far to 103%, and Micron Technology dropped 4.8% to shave its year-to-date gain to 184%.
The sell-off was worldwide, with indexes tumbling 6.5% in Taipei, 4% in Tokyo and 3% in Shanghai as stocks like Taiwan Semicondcutor Manufacturing Co. dropped 7.3%.
South Korea’s stock market was closed for a holiday, offering some respite. It’s been at the center of the AI swings recently because it’s dominated by two huge tech companies, Samsung Electronics and SK Hynix. This past week alone, Seoul’s Kospi stock index had one day where it surged 6.2% but two others where it sank 6.4% and 8.9%.
Adding to the pressure on Wall Street Friday were drops for several stocks following their latest earnings reports. It’s a departure from much of the rest of the week, when companies like Goldman Sachs and BlackRock jumped after delivering better profits for the spring than analysts expected.
Netflix sank 10.9% after its revenue for the latest quarter fell just short of analysts’ expectations, even though its profit was bigger than expected. Its forecasts for upcoming revenue and profit in the summer also fell below expectations.
Intuitive Surgical, a maker of robotic surgical systems, dropped 10.8% despite topping expectations for the latest quarter. Analysts pointed to worries about slowing procedure growth because of the expiration of enhanced tax credits that helped lower the cost of health insurance for many Affordable Care Act enrollees.
Elon Musk’s SpaceX fell 6.2% to touch its lowest level since its stock began trading on the Nasdaq just over a month ago. The owner of the xAI business has also gotten swept up in the swings of AI stocks, and it had to abort a test flight of its mega Starship rocket Thursday within a second or so from blasting off.
