The Nasdaq led losses as chip and tech-services stocks slidand IBM posted its worst trading day in decades,
Wall Street closed out Friday’s session, and the week, in the red across its major indices, with the Nasdaq hit hardest as tech and semiconductor stocks swung and tensions between the United States and Iran escalated.
At Friday’s close, the Dow Jones Industrial Average fell 0.77%, to 52,146 points; the S&P 500 dropped 1.01%, to 7,457; and the tech-heavy Nasdaq lost 1.40%, to 25,520. For the week, the Dow was down 0.9%, the S&P 500 fell 1.6%, and the Nasdaq slid 2.9%.
Tech’s uneven week
The technology sector was at the center of the selloff, closing the week down a cumulative 2.1%. The pain wasn’t evenly spread: tech-services stocks fell 15%, components dropped 8.7%, and semiconductors lost 4.3%, while software gained 2% and hardware rose 1.5%, according to Fidelity data.
Apple, up 5.8% on the week, is closing in on unseating Nvidia as the world’s most valuable company. Nvidia, one of the biggest beneficiaries of the artificial intelligence boom, lost 3.9% over the same period.
Analysts pointed to growing doubts about the sustainability of the AI rally, compounded by the launch of a new model from Chinese firm Moonshot AI that the company says competes directly with offerings from U.S. labs OpenAI and Anthropic. Experts have warned that low-cost, open-source Chinese models pose a real threat to U.S. labs, which generate revenue by charging for “tokens,” the units used to measure AI processing.
Bank earnings up, IBM’s worst day in decades
The week was also marked by second-quarter results from major banks and other financial firms, which generally reported higher profits and revenue on wider interest margins and stronger investment-banking fees.
IBM was the week’s biggest loser, down roughly 26%, after warning that its upcoming results would fall short of estimates. The initial read was soft demand for its z17 mainframe, built for AI workloads, but subsequent reporting suggests the picture is more nuanced: z17 placements are actually tracking well ahead of the prior z16 cycle, and the shortfall instead reflects clients redirecting their quarterly capital spending toward servers, storage and memory to lock in supply-constrained AI infrastructure ahead of expected price increases — delaying, rather than canceling, mainframe and software deals. The stock still posted its steepest single-day drop on record, erasing roughly $68.8 billion in market value.
Oil, inflation, and the Fed
Investors also kept a close eye on escalating cross-strikes between the United States and Iran, which pushed oil prices back above $82 a barrel, up 14.7% on the week — a move that could weigh on consumer spending and inflation.
On the data front, the U.S. Consumer Price Index (CPI) eased seven-tenths of a point to 3.5% in June on lower energy prices, while the Producer Price Index (PPI) fell to 5.5%, easing near-term expectations for a shift in monetary policy.
Federal Reserve Chair Kevin Warsh told Congress the central bank is not willing to accept “persistently elevated inflation” and pledged to work toward price stability, again describing the Fed’s recent history as a five-year stretch in which the institution fell short of its mandate.
