US stocks opened sharply lower on Friday, extending a technology-driven selloff that has gripped markets this week. The Dow Jones Industrial Average fell 207 points, while the Nasdaq Composite dropped 0.95% and the S&P 500 declined 0.61%. The losses were led by semiconductor stocks, which continued to retreat despite strong recent earnings and upbeat demand forecasts.
Chip Stocks Slide Despite Strong Earnings
Semiconductor names were among the biggest decliners. Micron Technology fell more than 5.8%, giving back some of the 15% surge it posted in the previous session after reporting better-than-expected quarterly results and guidance. Advanced Micro Devices and Intel each lost more than 3.5%, while Nvidia declined about 1.7%. Oracle also edged lower by 0.38%.
The selloff reflects growing investor unease about who ultimately bears the costs of massive investments in artificial intelligence infrastructure. A New York Times report that OpenAI is considering delaying its initial public offering until next year added to the negative sentiment, raising concerns about the sustainability of AI-related capital spending. JPMorgan traders noted in a research report that the delay "raised concerns about sustainability of their infrastructure spending given the delay in funding from the capital markets."
Technology shares had already come under pressure in Thursday's session. Apple plunged 6% after announcing price increases for iPads and MacBooks due to rising memory and storage costs. Microsoft also declined after raising prices on its Xbox gaming consoles. Apple recovered modestly on Friday, rising about 0.7%.
Inflation and Rate Fears Add Pressure
The market's concerns extend beyond technology spending. Fresh inflation data released Thursday showed US inflation climbed above 4% in May for the first time in three years, driven by higher energy prices linked to tensions in the Middle East. Although oil prices have recently retreated as geopolitical tensions eased, investors remain concerned that higher semiconductor costs could once again fuel broader inflationary pressures.
Interest rate expectations remain elevated. Traders are pricing in one 25-basis-point rate increase and a nearly 27% chance of another hike before year-end, according to LSEG data. These rate fears have added to the rotation out of growth stocks, particularly in the technology sector.
Global Tech Rout Spreads
The weakness in technology stocks extended beyond the United States. SoftBank Group, a major backer of OpenAI, plunged more than 12% in Asia. South Korea's Kospi dropped 5.81%, while Japan's Nikkei 225 declined 4.15%. Hong Kong's Hang Seng Index and China's CSI 300 also posted losses. European stocks moved lower as well, with the pan-European Stoxx 600 falling 1%.
For more on the global selloff, see our coverage of the tech rout deepening across Asia and the impact on major Asian tech names.
Individual Movers and Market Events
Among individual movers, Synaptics fell 0.95% after ON Semiconductor agreed to acquire the company in an all-stock deal valued at about $7 billion. Shares of ON Semiconductor fell 19.42% as the market reacted negatively to the deal's structure amid the broader tech de-rating.
Investors are also preparing for heavy trading activity tied to Russell index changes, including the reclassification of several megacap stocks and the fast-track addition of SpaceX to the Russell 1000.
For further context on the chip sector's struggles, read our analysis of memory chip stocks plunging on AI debt fears and rate hike bets.
This article is for informational purposes only and does not constitute financial advice.
