Market Overview
US equity markets concluded Friday with a significant retreat, capping a losing week dominated by a broad sell-off in technology and artificial intelligence (AI)-related stocks. This downturn was exacerbated by escalating oil prices, driven by geopolitical tensions, alongside persistent inflation concerns. While Federal Reserve Chair Kevin Warsh’s recent remarks were interpreted as a sign of steady monetary policy in the near term, investors are bracing for the implications of the tech sector’s struggles and inflationary pressures when Asian markets resume trading and as they look towards the coming trading week.
Markets
The tech-heavy Nasdaq Composite bore the brunt of the selling pressure, closing at 26,140.03, down 2.15% for the day. It recorded a weekly loss of 4.48%, marking its worst week since June. The broader S&P 500 also saw declines, closing at 7,659.44, down 1.09% for the day, and shedding 1.95% over the week. In contrast, the Dow Jones Industrial Average closed at 52,002.41, down 0.34% on Friday, but managed a weekly gain of 0.67%, partly cushioned by strength in energy stocks.
The VanEck Semiconductor ETF (SMH), tracking chipmakers, reflected the sector’s pain, closing at 539.79 with a 3.41% decline for the day. It suffered a steep weekly loss of 13.64%, its largest weekly drop since April 2025. The CBOE Volatility Index (^VIX), a gauge of market fear, closed at 19.99, surging 21.45% for the day and jumping 34.70% for the week. It had risen above 22 earlier in the session, reaching levels last seen four months prior, indicating increased market fear.
In commodities, WTI Crude traded at 99.04, up 1.09% for the day and surging 7.83% for the week, while Brent Crude traded at 109.69, up 3.56% for the day and advancing 4.75% for the week. Treasury yields saw slight increases, with the 10-Year Treasury Yield (^TNX) standing at 5.098%, rising 0.90 bp, and the 30-Year Treasury Yield (^TYX) at 5.436%, rising 0.70 bp.
What Drove Markets
AI and Semiconductor Sell-off
US tech and AI-related stocks experienced a significant sell-off on Friday, culminating in the Nasdaq’s worst week since June. Chipmakers, specifically, extended their losing streak to an eighth consecutive session, the longest for the sector since the 2008 financial crisis. The Philadelphia Semiconductor Index (SOX) slumped 11.4% for the week, its worst weekly performance since early April 2025.
Jitters over increased Chinese competition in memory chip production, concerns regarding the massive debt levels incurred by companies to fund AI infrastructure buildouts, and relatively modest revenue figures from AI firm Anthropic accompanied by reported lower IPO valuation expectations all contributed to the downturn. Neocloud firm CoreWeave, for instance, saw its total debt rise to more than $51 billion. Its bonds had tumbled to new lows, though Jensen Huang, CEO of Nvidia and CoreWeave’s second-largest shareholder, expressed confidence in its financial position, stating it did not need a backstop.
Among the impacted assets, Micron Technology (MU) closed at 878.84, down 5.63% for the day and -19.22% for the week. Advanced Micro Devices (AMD) fell 5.95% to 528.75, resulting in a -18.13% weekly decline. Sandisk (SNDK) closed at 1,299.30, down 6.85% for the day and -23.23% for the week. Neocloud companies CoreWeave (CRWV) and Nebius (NBIS) plunged 11.91% to 61.39 and 12.18% to 165.47 respectively, with weekly losses of -30.59% and -30.23%. This long-term outlook for the sector was further dampened by a Gartner report predicting that by 2030, 80% of neocloud providers are expected to cease independent operations. NVIDIA (NVDA), a key AI chip company, also closed lower at 214.13, down 1.43% for the day and -9.83% for the week.
Concerns about Chinese competition in memory chip production led to steep weekly losses for major South Korean memory chipmakers. SK Hynix (000660.KS), despite a 0.79% daily gain to 1,272,000.00, logged a weekly loss of -28.26%, and Samsung (005930.KS), up 2.62% to 215,500.00, registered a weekly decline of -20.77%. These will be key stocks to watch when Asian markets resume trading.
Elevated Energy Prices and Geopolitical Tensions
Oil prices moved significantly higher, contributing to overall market pressure and exacerbating inflation data. This came amid rising tensions between the U.S. and Iran, ongoing conflict between Russia and Ukraine, and furious fighting between Iran-backed Houthis and the Saudi Arabia-backed government in Yemen. These developments stoked supply fears in key shipping lanes like the Strait of Hormuz and Bab el-Mandeb Strait. President Trump’s announced diesel supply deal with Russian President Vladimir Putin also stirred bipartisan backlash, with Ukraine vowing to resume attacks on Russia’s energy infrastructure. Energy stocks like Chevron (CVX) saw gains, closing at 224.99, up 2.59% for the day and 9.67% for the week, helping to check Dow losses.
Inflation and Federal Reserve Outlook
Hotter-than-expected inflation data was a key concern for markets this week, with wholesale inflation seeing its biggest gain since 2022 and consumer inflation remaining well above the Federal Reserve’s 2% target. Elevated energy prices further exacerbated these inflationary pressures. However, Federal Reserve Chair Kevin Warsh’s recent speech at an IMF event in Bangkok offered little hawkish commentary. He did not comment on whether the Fed would raise rates before year-end, which traders interpreted as a sign the central bank will hold policy steady. The CME Group’s FedWatch tool points to an 82% chance the Fed keeps its overnight rate unchanged at its upcoming October 27-28 meeting, a tempering of rate hike expectations from nearly 28% the previous day to around 17%.
Stocks to Watch
Several individual stocks were at the forefront of this week’s market movements:
- Micron Technology (MU): Closed at 878.84, down 5.63% (day) and -19.22% (week), a major memory chipmaker impacted by Chinese competition concerns.
- Advanced Micro Devices (AMD): Closed at 528.75, down 5.95% (day) and -18.13% (week), another prominent chipmaker experiencing declines.
- Sandisk (SNDK): Closed at 1,299.30, down 6.85% (day) and -23.23% (week), part of the semiconductor sector’s broad sell-off.
- CoreWeave (CRWV): Closed at 61.39, down 11.91% (day) and -30.59% (week), a neocloud company whose stock plunged amid credit concerns for AI infrastructure.
- Nebius (NBIS): Closed at 165.47, down 12.18% (day) and -30.23% (week), a peer to CoreWeave, also seeing notable decline.
- NVIDIA (NVDA): Closed at 214.13, down 1.43% (day) and -9.83% (week), a key AI chip company and major contributor to market earnings.
- SK Hynix (000660.KS): Closed at 1,272,000.00, up 0.79% (day) but down -28.26% (week), a South Korean memory chipmaker, impacted by Chinese competition concerns and a key stock for APAC investors when trading resumes.
- Samsung (005930.KS): Closed at 215,500.00, up 2.62% (day) but down -20.77% (week), another South Korean memory chipmaker facing similar pressures.
- Chevron (CVX): Closed at 224.99, up 2.59% (day) and 9.67% (week), an energy stock that saw gains amid rising oil prices.
- Tesla (TSLA): Closed at 354.72, down 2.13% (day) and -6.11% (week), caught in the broader tech sector slide.
- Alphabet (GOOGL): Closed at 340.59, down 2.47% (day) and -2.83% (week), a key driver of earnings growth, but also impacted by the tech sell-off.