U.S. stocks fell this week as higher-than-anticipated inflation and doubts over artificial intelligence spending hit technology shares.
On Monday, the bond market was closed for Columbus Day, but stocks were traded normally.
The Dow Jones Industrial Average rose 0.4%, while the S&P 500 slipped 0.1% and the Nasdaq composite fell 0.4%. Memory chip stocks dropped after Chinese chipmaker ChangXin Memory Technologies reported progress on a new memory design, with Micron Technology and SK Hynix falling more than 3% and Samsung Electronics sliding 4%.
For Western chip companies, a stronger Chinese competitor could lower prices and shrink profits.
On Tuesday, the market consolidated as banks released third-quarter earnings. The Dow fell 0.3%, the S&P 500 slipped less than 0.1% and the Nasdaq dipped 0.2%.
Goldman Sachs earned $17.01 per share above the $13.02 analysts expected, while JPMorgan Chase fell short of profit estimates.
On Wednesday, stocks experienced their worst day since July. The Dow slipped 0.1%, the S&P 500 fell 1.1% and the Nasdaq dropped 1.9%.
The consumer price index demonstrated an average price increase of 3.7% in September from a year earlier, above the 3.6% economists expected.
The report raised concerns that the Federal Reserve could again raise interest rates again this month, pushing the 10-year Treasury yield up to 5.278%.
Higher interest rates raise borrowing costs, leading individuals and institutions to reduce spending, hurting the broader economy.
On Thursday, stocks rebounded after several companies reported strong profits. The Dow jumped 1.1%, the S&P 500 rose 0.3% and the Nasdaq climbed 0.1%.
Wholesale prices rose 6.3% in September from a year earlier, the biggest jump since 2022. The data was “a bucket of cold water for dovish hopes,” according to Daniela Hathorn, a senior market analyst at Capital.com.
On Friday, technology stocks fell again. The Dow lost 0.3%, the S&P 500 dropped 1.1% and the Nasdaq fell 2.1%.
Investors questioned whether tech companies can maintain high spending on AI, given higher borrowing costs. Chipmakers who sell the hardware that powers AI were hit hard. Advanced Micro Devices fell 6%, Intel declined 5.8% and Micron sank 5.6%.
Brent crude oil climbed 3.7% to settle at $109.86 per barrel after President Donald Trump announced that the U.S. may strike Iran’s nuclear facilities again. Energy stocks were among the few gainers, with Exxon Mobil and Chevron each rising about 2.5%.
Higher oil prices raise transportation and production costs, adding to inflation.
For the week, the Dow ticked up 0.7%, the S&P 500 fell 1.9% and the Nasdaq lost 4.5%. It was the “worst week” for the S&P 500 and Nasdaq since June.
Looking ahead, big tech companies will report their quarterly profits, starting with Netflix on Tuesday. Investors will be checking whether the spending by companies on AI is generating revenue.
Strong results could ease fears of an AI bubble, lifting tech stocks. However, weak earnings or inflation could lead to another Fed rate hike, depressing investor sentiment.
