The Nasdaq Composite dropped 2.1 percent Friday, closing at 26,140.03, as a rebound in technology shares stalled amid ongoing anxiety over artificial intelligence investments. While the S&P 500 declined 1.1 percent to 7,659.44 and the Dow Jones Industrial Average slipped 0.3 percent to 52,002.41, most European and Asian exchanges recorded solid trading sessions earlier in the week. Investors have been shifting funds away from AI-related stocks and into bonds, a trend that continued despite reassurances from major industry figures.
Nvidia chief executive Jensen Huang sought to stabilize sentiment by commenting on the financial health of CoreWeave, an AI data center firm. His remarks helped boost Asian markets, where the Seoul and Tokyo indices led gains driven by strong performance from chipmakers SK hynix and Kioxia. The Nikkei 225 rose 1.4 percent to close at 65,324.29, and the Kospi climbed 2.1 percent to end at 5,668.05. However, this positive momentum faded as Wall Street opened for the day.
"There's little love for tech stocks right now, investors are dumping them at a rather undignified pace," said Chris Beauchamp, an analyst at IG. He noted that a recovery seen in previous sessions provided only brief respite before selling resumed in the US market. The weakness in the AI sector became more pronounced during the New York session, with so-called "neocloud" companies CoreWeave and Nebius both sinking approximately 12 percent.
Markets had been spooked by concerns regarding CoreWeave's substantial debt load. Yields on CoreWeave bonds soared this week, reflecting worries over the company's future. Arun Sundaram of CFRA Research stated that the weakness in these stocks is driven by financing risk and the possibility that interest rates will rise, which would affect their interest payments. He added, "We're clearly seeing some areas of stress in this very unique part of the AI market."
US stocks also lost ground as oil prices increased, with both major crude contracts finishing up more than three percent. Brent North Sea crude rose 3.7 percent to $109.86 per barrel, while West Texas Intermediate climbed 3.5 percent to $101.41 per barrel.
At the International Monetary Fund and World Bank meetings in Bangkok, Federal Reserve Chair Kevin Warsh described AI as the most consequential economic shift he has witnessed in his career. He explained that while the surge in spending would likely push prices higher initially, he believes the long-term effects will be highly beneficial for both the global and US economies. Warsh cautioned that the journey toward that outcome would likely be turbulent, noting that market structures for these emerging technologies remain unclear.
In separate news, the Jakarta stock market tanked more than 11 percent, marking its heaviest loss since 1998. The decline followed a statement from index compiler MSCI, which said transparency concerns made it "no longer appropriate" to maintain Indonesia's emerging-market status. A potential downgrade to "standalone" status could trigger an exodus of foreign investment from the Indonesian market.
European markets remained positive Friday, with the Frankfurt DAX up 1.0 percent at 25,622.61, the London FTSE 100 up 0.4 percent at 10,881.90, and the Paris CAC 40 up 0.3 percent at 7,956.70. In Asia, the Hang Seng Index rose 0.5 percent to 24,186.83 and the Shanghai Composite gained 0.2 percent to close at 3,716.28.