US market ends lower as tech stocks weigh on sentiment
Wall Street ended lower on Friday, with a steep drop in AI-related chip stocks and sharp gains in Moderna and other healthcare stocks.
The PHLX chip index tumbled, underscoring recent volatility among AI-related chipmakers that have fueled much of Wall Street's gains in recent years. While some investors remain optimistic about the potential for AI to fuel higher profits, others worry that massive spending to build AI data centers may take too long to pay off.
"It's too early to conclude that there's a major correction brewing in tech, but what I would say is that the questions around profitability and the capex story are certainly not going away," said David Stubbs, chief investment strategist at AlphaCore Wealth Advisory.
Stubbs also warned that Wall Street could be vulnerable to signs that U.S. companies may not be able to deliver on investors' high earnings expectations. Apple partly rebounded from a selloff on Thursday, when it raised iPad and MacBook prices, blaming soaring memory and storage chip costs.
Moderna surged to its highest level since 2024 after the drug developer hosted an investor event and showcased its pipeline. U.S. inflation rose above 4% in May, data showed on Thursday, as the Iran war drove up energy prices, keeping alive the possibility of a Fed rate hike.
While oil prices have retreated sharply as the Middle East tensions eased, Apple's newly announced price hikes suggest inflation remains a concern, said Art Hogan, chief market strategist at B. Riley Wealth.
The PHLX chip index tumbled, underscoring recent volatility among AI-related chipmakers that have fueled much of Wall Street's gains in recent years. While some investors remain optimistic about the potential for AI to fuel higher profits, others worry that massive spending to build AI data centers may take too long to pay off.
"It's too early to conclude that there's a major correction brewing in tech, but what I would say is that the questions around profitability and the capex story are certainly not going away," said David Stubbs, chief investment strategist at AlphaCore Wealth Advisory.
Stubbs also warned that Wall Street could be vulnerable to signs that U.S. companies may not be able to deliver on investors' high earnings expectations. Apple partly rebounded from a selloff on Thursday, when it raised iPad and MacBook prices, blaming soaring memory and storage chip costs.
Moderna surged to its highest level since 2024 after the drug developer hosted an investor event and showcased its pipeline. U.S. inflation rose above 4% in May, data showed on Thursday, as the Iran war drove up energy prices, keeping alive the possibility of a Fed rate hike.
While oil prices have retreated sharply as the Middle East tensions eased, Apple's newly announced price hikes suggest inflation remains a concern, said Art Hogan, chief market strategist at B. Riley Wealth.
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