US equities concluded the week lower, with technology shares particularly impacted after a Chinese startup unveiled a new artificial intelligence model. The tech-heavy Nasdaq 100 Index dropped 1.5 per cent, marking its worst weekly performance in nearly a month, as Meta led the “Magnificent Seven” cohort downwards. The Philadelphia Stock Exchange Semiconductor Index experienced a 1.6 per cent decline, extending its fall from a June record to 20 per cent, meeting the definition of a bear market. Mark Hackett, chief market strategist at Nationwide, observed, “As we enter earnings season, a market defined by modest selloffs and rapid recoveries suggests bulls remain in control, but they’re waiting for an all-clear signal from earnings before pushing stocks to new highs.”
The broader S&P 500 Index also fell 1 per cent, interrupting two consecutive weeks of gains and finishing below its 50-day moving average. Chipmakers continued their sell-off following the breakthrough from Moonshot, which claimed its Kimi K3 model could rival leading offerings from OpenAI and Anthropic PBC. While earnings and demand trends in the AI sector largely remain robust, recent profit-taking indicates some investors are questioning the sustainability of current growth, according to David Morrison at Trade Nation. Angelo Kourkafas from Edward Jones suggested the AI theme is likely maturing rather than breaking, recommending diversified exposure to complement it.
This market weakness might also reflect a necessary shift between sectors rather than a broader breakdown, as Citigroup’s Beata Manthey noted, anticipating a long-awaited broadening beyond tech. In corporate news, Meta, a technology conglomerate focusing on social networking and AI, is in early discussions to lease computing power to Anthropic. Apple Inc., which designs, manufactures, and markets smartphones and related services, is in early talks with the US Justice Department to settle a 2024 antitrust lawsuit. Netflix, a global streaming service, forecast a second consecutive quarter of slowing sales growth, causing its shares to slump. Alcoa Corporation, a global leader in bauxite, alumina, and aluminium production, cut its alumina production forecast following operational issues at an Australian refinery.
