US stocks fell sharply on Friday as investors continued to retreat from technology and artificial intelligence-related shares, while rising oil prices and persistent inflation concerns weighed on sentiment.
The S&P 500 dropped 1.09% to 7,659.44, while the Nasdaq Composite slid 2.14% to 26,140.03. The Dow Jones Industrial Average declined 175.28 points, or 0.34%, to 52,002.41. The Cboe Volatility Index climbed above 22 for the first time in four months.
Technology stocks led the declines amid concerns about the growing debt used to finance AI infrastructure and increasing competition from Chinese chipmakers.
The VanEck Semiconductor ETF fell 3%, with Micron Technology, AMD and Sandisk among the major decliners. The fund lost around 10% for the week, its steepest weekly fall since April 2025.
CoreWeave plunged nearly 12%, taking its weekly losses to approximately 25%, as investors questioned the sustainability of debt-funded AI expansion.
For the week, the S&P 500 fell around 2%, while the Nasdaq shed more than 4%, its worst weekly performance since June. The Dow gained 0.7% as investors rotated towards sectors outside technology.
Oil prices surged amid developments in the Iran war and the Russia-Ukraine conflict. West Texas Intermediate crude jumped 3.51% to US$101.41 a barrel, while Brent rose 3.72% to US$109.86.
The rally in energy prices added to inflation concerns following stronger-than-expected US consumer and producer price data. Markets nevertheless priced in an 82% probability that the Federal Reserve would leave interest rates unchanged at its October meeting.
Australian Market Outlook
Australian shares are set for a modest decline, with S&P/ASX 200 futures pointing to a 0.1% fall at Monday’s open. The local market is expected to remain relatively insulated from the technology-led sell-off, given its lower direct exposure to AI-related stocks. The ASX 200 gained 1% last week, outperforming major US benchmarks as investors shifted away from highly valued technology companies. However, rising global bond yields, elevated oil prices and uncertainty surrounding AI investment returns could continue to influence sentiment. Investors will be watching the performance of energy and resources stocks, alongside developments in global technology markets and the outlook for US interest rates.
