NEW YORK: Wall Street bounced back on Friday following a heavy tech rout earlier in the week, though Amazon slid sharply after it flagged an even bigger investment into AI infrastructure.
Amazon dropped 8percent after it forecast a more than 50percent jump in capital expenditures this year, intensifying the AI-driven spending spree already underway among its “Magnificent Seven” peers. The S&P 500 and the Nasdaq snapped three straight losing sessions, while the Dow briefly scaled a peak as some bargain-hunters stepped in to buy the dip.
Chip stocks, caught in the crosshairs of the tech selloff, were the main drivers of the day’s rally. Broadcom rose 5.6percent and AMD jumped 7.5percent. Super Micro gained nearly 10percent. Nine of the 11 sub-indexes posted gains. The PHLX semiconductor index rose 4.6percent, while the S&P 500 tech index added 2.8percent.
The S&P 500 Software & Services index posted its first gain after seven straight declines, though it was set for a weekly drop of more than 8percent — its weakest performance since March 2020. At 11:26 a.m. ET, the Dow Jones Industrial Average rose 874.32 points, or 1.79percent, to 49,783.04. The S&P 500 gained 94.49 points, or 1.39percent, to 6,892.89, while the Nasdaq Composite advanced 326.80 points, or 1.45percent, to 22,867.38.
The CBOE volatility index, Wall Street’s fear gauge, dropped for the first time in three days, down 3.19 points at 18.258. Friday’s gains, however, could only reverse part of the declines seen during the week. The S&P 500 was headed for its worst week since late-December, while the Nasdaq was set to post its steepest weekly loss since November. The AI trade, one of the biggest engines of last year’s rally, is also facing a substantial stress test as money flows into defensive havens such as consumer staples and telecoms. That rotation is unfolding just as risky assets are scaling back, with bitcoin down 50percent from its October peak.
The Russell 2000 index added 2.8percent and was headed for its best week since late-November. The S&P 600 small-cap index and the S&P 400 mid-cap index were headed for gains of over 1percent this week. This week also hit the halfway mark of one of the busiest earnings stretches of the season. As of Thursday, about 270 S&P 500 companies had reported, with roughly 80percent topping analysts’ expectations, according to LSEG data, well above the typical beat rate of about 67percent.
Molina Healthcare slumped 27percent after the health insurer forecast 2026 profit at less than half of Wall Street expectations. Roblox gained 11percent after the video game platform projected fiscal 2026 bookings above estimates.