Wall Street tumbles as concerns over economy, tech valuations weigh

NEW YORK: Wall Street’s main indexes extended losses to a second session on Friday, and were set for weekly declines, as concerns about the economy and sky-high valuations in the technology sector soured sentiment.

The tech-heavy Nasdaq declined almost 2percent on Thursday after Wall Street executives earlier this week warned a market correction could be on the way. The Dow is set for its steepest weekly loss in four, while the S&P 500 and the Nasdaq are poised for their worst weekly performances since March.

Optimism around artificial intelligence has pushed markets to all-time highs this year, but concerns over monetization of the technology and circular spending within the industry has dampened enthusiasm for US stocks in recent days.

“As markets price in more and more excitement around the AI narrative and it gets increasingly difficult to have conviction that it’s going to be ... worth all of this investment, you’re going to get a little more volatility,” said Jeff Buchbinder, LPL Financial’s chief equity strategist.

Tech stocks such as Nvidia and Broadcom fell 4.3percent and 5percent, respectively. The information technology sector and the broader semiconductor index were set for their biggest weekly declines in seven months. Microchip Technology shares dropped 10.1percent after forecasting quarterly net sales below estimates.

At 11:45 a.m. ET, the Dow Jones Industrial Average fell 281.15 points, or 0.60 percent, the S&P 500 lost 69.50 points, or 1.03 percent, and the Nasdaq Composite lost 410.65 points, or 1.7 8percent. The Russell 2000 hit an over seven-week low.

The CBOE Volatility Index, Wall Street’s fear gauge, hit its highest level in three weeks. Tesla shareholders approved the largest corporate pay package in history for CEO Elon Musk. Shares fell 4.7 percent tracking broader market sentiment and weighed on the consumer discretionary sector. On the earnings front, data compiled by LSEG until Friday showed 82.5percent of the 446 companies in the S&P 500 that have reported results so far have beaten Wall Street expectations, the highest rate of better-than-expected results since the second quarter of 2021.

Expedia jumped 16percent to top the S&P 500 after the online travel platform boosted its forecast for full-year revenue growth and posted third-quarter profit above expectations.