Nasdaq Plunges 4.6% for the Week as AI Selloff Accelerates, Dow Defies the Market
Wall Street closed a bruising week on Friday, June 26, with investors continuing to dump many of the technology companies that have fueled the market’s historic rally over the past two years. The Nasdaq Composite fell for a fifth consecutive session, capping its steepest weekly decline in months, as mounting concerns over artificial intelligence valuations, persistent inflation, and higher interest rates drove money into more defensive sectors. The pressure intensified after the Commerce Department reported Thursday that the Personal Consumption Expenditures (PCE) price index — the Federal Reserve’s preferred measure of inflation — climbed 4.1% in May from a year earlier, its highest reading since April 2023.
By the closing bell, the Nasdaq Composite slipped 0.24% to 25,297.62. The S&P 500 eased 0.05% to 7,354.02, while the Dow Jones Industrial Average lost 44.51 points, or 0.09%, to 51,876.11.
The weekly performance painted a much sharper picture. The Nasdaq tumbled 4.6%, its worst five-day stretch in months, as investors aggressively reduced exposure to high-priced AI and semiconductor stocks. The S&P 500 lost nearly 2%, while the Dow bucked the trend, rising 0.6% as institutional investors rotated into healthcare, industrial, financial, and other value-oriented sectors viewed as better positioned if interest rates remain elevated.
Adding to investor caution, a New York Times report said OpenAI is leaning toward delaying its long-anticipated initial public offering until next year amid increasingly volatile conditions across AI-related stocks. The report renewed debate over whether investors are becoming more selective after months of soaring valuations and massive spending on artificial intelligence infrastructure.
The weakness spread well beyond U.S. markets. In Asia, South Korea’s Kospi plunged so rapidly Friday that trading was temporarily halted after triggering an exchange circuit breaker. The index ultimately closed down 5.8%, underscoring how concerns surrounding the global technology sector have rippled through markets worldwide.
Market movers
Micron Technology stood out as one of the week’s few winners. After reporting blockbuster quarterly earnings Wednesday evening, the memory-chip manufacturer beat Wall Street expectations, raised its outlook, and reaffirmed that demand for high-bandwidth memory used in AI servers continues to accelerate. Bank of America Global Research said the results reinforce the long-term strength of AI-driven memory demand.
Some of the market’s largest companies faced much heavier selling. Apple dropped 6.13% Thursday while Microsoft declined 3.23% after announcing price increases on several major consumer products, including the iPhone and Xbox, citing rising component and memory costs. Their declines weighed heavily on the broader Magnificent Seven, which collectively accounted for much of the week’s weakness in the Nasdaq.
SpaceX, trading under ticker SPCX, gained roughly 1.5% Friday ahead of its scheduled addition to the Russell 1000 Index after the market close. The stock has remained highly volatile since its June 12 debut, soaring above $200 before retreating toward the $150 range.
Meanwhile, JPMorgan Chase announced that Doug Petno and Troy Rohrbaugh have been named co-presidents, marking another significant step in CEO Jamie Dimon’s long-anticipated succession planning.
Commodities and volatility
Gold climbed about 1.1% Friday to approximately $4,092 an ounce as investors sought traditional safe-haven assets following the week’s technology selloff and renewed inflation concerns.
Oil prices moved sharply lower. Brent crude and West Texas Intermediate each fell more than 3.5% as commercial shipping continued moving through the Strait of Hormuz without major disruption and diplomatic efforts under the U.S.-brokered memorandum of understanding reduced fears of an immediate supply shock. Both benchmarks have now retreated to their lowest levels since before the Iran conflict escalated in late February.
Economic data continued sending mixed signals. The Commerce Department reported headline PCE inflation increased 0.4% during May and 4.1% over the past year, while core PCE, excluding food and energy, rose 3.4%, its highest annual pace since October 2023. Personal income and consumer spending each increased 0.7%, indicating households continue spending despite higher prices.
Separately, University of Michigan consumer sentiment director Joanne Hsu said long-term expectations for business conditions improved sharply during June as concerns surrounding the Iran conflict eased.
The latest inflation figures leave the Federal Reserve in a difficult position. Chair Kevin Warsh, who left interest rates unchanged at 3.50% to 3.75% during the June 16–17 policy meeting, has continued signaling that another rate increase remains possible later this year if inflation fails to moderate. Supporting that cautious approach, durable goods orders fell 4.5% in May while weekly jobless claims declined to 215,000, pointing to a labor market that remains resilient.
The week ahead
Markets will be closed on Friday, July 3, in observance of the Independence Day holiday, making next week’s June employment report, scheduled for Thursday, July 2, the market’s primary focus.
Investors will closely examine payroll growth, wage gains, and unemployment for fresh clues about whether the labor market is finally beginning to cool—or whether continued economic strength will give the Federal Reserve additional reason to keep interest rates higher for longer. After one of the most difficult weeks for technology stocks this year, the next round of economic data could determine whether the AI-driven selloff deepens or whether buyers step back into one of Wall Street’s biggest growth trades.
JBizNews Desk
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