Dow, S&P 500 and Nasdaq End Week Lower as Chip Stocks Extend Sell-Off

U.S. stocks closed lower, with all three major indexes posting weekly losses as a sharp sell-off in semiconductor stocks weighed on investor sentiment, Grace O'Donnell, Jake Conley and Ines Ferré reported for Yahoo Finance.

Semiconductor stocks led Wall Street lower as investors reassessed AI-related spending and technology valuations. (Photo: Anthony Quintano Flickr)

The Dow Jones Industrial Average fell about 0.7%, while the S&P 500 lost 1.0% and the Nasdaq Composite declined 1.4%.

For the week, the S&P 500 dropped more than 1.5%, the Nasdaq fell 2.9%, and the Dow lost nearly 1%.

The PHLX Semiconductor Index (SOX) entered bear market territory as semiconductor stocks came under heavy selling pressure, although the index recovered from its session lows as investors bought into the weakness.

The recent technology-driven market rally has faced renewed pressure as investors reassessed the heavy capital spending required for artificial intelligence infrastructure.

Adding to investor jitters, Chinese AI startup Moonshot unveiled Kimi K3, an open-weight AI model the company described as one of the world's largest, positioning it against leading frontier models such as Anthropic's Fable.

Meanwhile, Netflix shares fell 7% after the company's third-quarter revenue forecast disappointed investors amid what it described as a "dynamic and competitive" entertainment market.

The earnings season also featured reports from regional lenders including Truist Financial Corp. and Fifth Third Bancorp. Separately, the University of Michigan's preliminary consumer sentiment survey showed Americans were becoming more optimistic about the economy as gasoline prices eased.