Highlights
Stock indexes tanked on Friday to end a week of losses amid continuing reallocation out of technology and the AI trade. The Dow Jones industrial average lost 0.3 percent, the S&P fell 1.1 percent, and the Nasdaq dropped 2.1 percent. Bond yields rose at the very long end but declined across shorter maturities. The dollar declined and WTI oil prices rose amid ongoing supply worries.
Investors continued to scale back on positions in tech and the AI trade as the view gains traction that the trade has been overdone. Rising oil prices and another batch of hotter than expected inflation reports have kept pressure on growth stocks and risky assets generally on the view that interest rates will stay high for longer than expected and may rise further. In the absence of specific news related to AI, the selloff appears to reflect ongoing erosion in market sentiment.
Defensive sectors held up best on Friday including pharma, utilities and consumer staples, plus energy outperformed on rising oil prices. Lagging in addition to tech were hospitals, airlines, trucking, software, and tech hardware.