Key facts
- US stocks experienced significant volatility this week.
- Technology and AI-related shares drove sharp reversals in the market.
- The Nasdaq-100 index declined over 3%.
- U.S.-traded chipmakers lost more than $1 trillion in market value.
- Broadcom's weak AI chip report and forecast miss impacted chip stocks.
- Concerns over high-flying tech stocks and rising interest rates fueled the selloff.
- The S&P 500 experienced its largest single-day decline since April 2025 on Friday.
- A stronger-than-expected US jobs report increased expectations of a Federal Reserve rate hike.
- Geopolitical tensions in the Middle East contributed to market nervousness.
- The Japanese yen fell to 160 per dollar.
- European shares ended lower, with the STOXX 600 down 0.3% on Friday.
- Foreign investors became net sellers of Japanese stocks last week.
US stock markets experienced significant volatility this week, marked by sharp reversals in technology and artificial intelligence-related shares. The Nasdaq-100 index declined over 3%, with U.S.-traded chipmakers collectively losing more than $1 trillion in market value. Companies like Nvidia, Micron, AMD, and Broadcom were heavily impacted, the latter's weak AI chip report and forecast miss triggering a broader selloff. Concerns over high-flying tech stocks and rising interest rates fueled this downturn, with the S&P 500 experiencing its largest single-day decline since April 2025 on Friday following a stronger-than-expected jobs report. This report increased expectations of a Federal Reserve rate hike, halting the index's early week record highs.
Geopolitical tensions in the Middle East also contributed to market nervousness. Renewed US-Iran clashes initially caused stocks and oil prices to decline, though oil eased from highs after a ceasefire between Israel and Lebanon was agreed upon. The Japanese yen fell to the 160 per dollar level against the dollar, driven by dollar strength and Middle East tensions, prompting verbal warnings from Japanese authorities against excessive yen weakness. BoJ Governor Ueda signaled potential interest rate hikes.
In Europe, shares ended lower with the STOXX 600 down 0.3% on Friday and 0.5% for the week. Tech stocks paused after a strong rally, and stronger U.S. jobs data reinforced expectations of Federal Reserve rate hikes, with markets pricing in a 25-basis-point ECB hike next week. Foreign investors became net sellers of Japanese stocks last week, ending a two-month buying streak, citing concerns over a potential bubble in AI-related stocks. US household wealth in stocks hit a record 33%, though the wealthiest 10% own 87% of stock wealth, contributing to a K-shaped economy.
Several individual companies faced significant stock movements. CrowdStrike shares dropped 7% after its quarterly forecasts failed to meet investor expectations. Snap shares declined 1.5% as investors questioned its turnaround strategy and ability to improve profit margins, despite 12% revenue growth. SoftBank's stock declined 11% on the Tokyo exchange amid market concerns regarding its high-risk artificial intelligence investments. IBM and Oracle were identified as significant stock movers impacting overall market capitalization. Gorilla Technology announced a $107 million convertible bond offering.
The concentration of technology stocks within the S&P 500 reached over 39% of its market capitalization, fueled by AI enthusiasm, raising concerns about market breadth and prompting calls for portfolio diversification. The VIX, Wall Street's 'fear gauge,' increased on Friday as the rally in semiconductor stocks reversed, suggesting a return of market volatility.