Wall Street opened lower Friday, June 26, as a fresh wave of selling in technology shares weighed on the major indexes, even as new economic data showed Americans are becoming more optimistic about the outlook for the economy.
The University of Michigan released its final June consumer sentiment survey Friday morning, showing confidence improved from earlier in the month. According to the report, expectations for business conditions over the next five years jumped 16%, while long-term inflation expectations eased to 3.3%, down from the prior month. Joanne Hsu, director of the survey, said concerns over the potential long-term economic impact of the recent Iran conflict have begun to fade, although overall consumer sentiment remains below where it stood before the conflict escalated.
Despite the encouraging economic data, investors focused on renewed weakness across the technology sector.
Shortly after the opening bell, the Nasdaq Composite fell about 1.1%, the S&P 500 lost roughly 0.7%, and the Dow Jones Industrial Average declined approximately 237 points, or 0.5%. The Russell 2000, which tracks smaller companies, outperformed the broader market, rising about 0.7% as investors rotated money away from mega-cap technology stocks and into other sectors.
The biggest catalyst appeared to be reports that OpenAI may postpone its widely anticipated initial public offering until 2027.
According to published reports, advisers presented OpenAI Chief Executive Sam Altman with two options: pursue an IPO next year at a valuation below $1 trillion, or wait until 2027 in hopes of achieving the trillion-dollar milestone. Altman reportedly rejected the lower valuation, believing the company should not go public until it can command a $1 trillion market value.
The report renewed concerns that valuations throughout the artificial intelligence sector have become stretched after months of rapid gains. Investors also remain focused on the enormous capital spending required to build AI infrastructure, including data centers and advanced semiconductor capacity.
The weakness spread beyond the United States.
South Korea’s stock market experienced one of its sharpest selloffs in months after the Kospi briefly plunged 8%, triggering an automatic trading halt under the country’s circuit-breaker rules. The benchmark later recovered part of its losses but still finished the session down 5.8%. Technology shares led declines throughout much of Asia as investors reassessed lofty AI-related valuations.
Market movers
Semiconductor and AI-related stocks led losses early Friday.
The Roundhill Magnificent Seven ETF, which tracks Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla, slipped in premarket trading to approximately $60.95 as investors reduced exposure to the largest technology companies.
Healthcare stocks once again provided a defensive haven.
Eli Lilly climbed nearly 6%, Johnson & Johnson advanced more than 3%, and AbbVie gained over 2%, extending the sector’s strong performance from Thursday as investors sought more stable earnings during the technology selloff.
BlackBerry shares fell roughly 3%, giving back a small portion of Thursday’s nearly 20% rally. The software company recently reported fiscal first-quarter revenue of $152.9 million, up 25.6% from a year earlier, while net income more than quadrupled. Analyst sentiment also remained positive, with Stifel initiating coverage with a Buy rating and a $12 price target, while CIBC raised its target price to $10.
Friday’s weakness followed a mixed performance on Thursday.
The Dow Jones Industrial Average finished at a record closing high of 51,920.62, gaining 71.72 points, or 0.14%, as healthcare, industrial and financial stocks offset weakness in technology.
The S&P 500 ended nearly unchanged at 7,357.49, while the Nasdaq Composite fell 0.46% to 25,358.60, marking its first four-session losing streak since February.
One bright spot was Micron Technology, whose shares surged 17% after reporting quarterly results that significantly exceeded Wall Street’s expectations. The company posted adjusted earnings of $25.11 per share, well above analysts’ consensus estimate of $20.78. Analysts at Bank of America Global Research said the results reinforced the critical role advanced memory chips continue to play in the expanding AI market.
Meanwhile, Apple dropped 6% after announcing price increases across several MacBook and iPad models, while Microsoft lost more than 3% following higher Xbox pricing. Investors attributed much of the pricing pressure to rising memory and component costs. Caterpillar gained 6%, benefiting from continued strength in industrial shares.
Commodities and volatility
Oil prices continued to decline as concerns over Middle East supply disruptions eased.
International benchmark Brent crude for August delivery fell about 2% to $73.72 per barrel, while West Texas Intermediate dropped a similar amount to $70.48 per barrel after additional tankers resumed transit through the Strait of Hormuz, easing fears of prolonged shipping disruptions despite reports of an attack on a commercial vessel near the Gulf of Oman.
Gold futures rose 0.4% to $4,063.70 an ounce as investors sought traditional safe-haven assets, while silver slipped 0.9% to $58.74 an ounce.
Market volatility also edged higher as traders monitored whether the latest rotation out of high-priced technology stocks would deepen into the afternoon.
Investors now head toward the closing bell watching whether improving consumer confidence and falling oil prices can stabilize broader markets, or whether renewed concerns surrounding AI valuations will continue driving money away from the technology sector.
JBizNews Desk
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