US stock markets ended sharply lower on Friday, with the S&P 500 and Nasdaq Composite falling over 1 percent, as investors rotated out of technology stocks amid renewed concerns over an AI investment bubble and rising US Treasury yields.
Tech Sell-Off Weighs on Wall Street
The technology sector came under heavy pressure after disappointing updates from major players Broadcom and Oracle, raising questions about the sustainability and profitability of aggressive AI-led capital spending.
Broadcom shares plunged 11.4 percent after the chipmaker cautioned about narrower profit margins going forward, triggering fresh worries that the rapid surge in AI investments may not translate into commensurate earnings growth.
Oracle stock declined another 4.5 percent, extending its losses after an almost 11 percent drop in the previous session. The selling followed the companyтАЩs weak financial outlook, which overshadowed OracleтАЩs clarification denying a media report that its data centre projects for OpenAIтАЩs ChatGPT were facing delays.
Rising Bond Yields Add to Market Pressure
Adding to equity market weakness, US Treasury yields moved higher after several Federal Reserve officials, who had dissented against the recent interest rate cut, publicly expressed concerns that inflation remains too elevated to justify easier monetary policy.
Their comments dampened expectations of aggressive rate cuts ahead, leading to higher bond yields and further pressuring growth and technology stocks, which are particularly sensitive to interest rate movements.
Investor Sentiment Turns Cautious
The combination of hawkish Fed commentary, rising yields, and mounting skepticism around AI-driven valuations prompted investors to shift away from high-growth technology names toward relatively defensive sectors.
As markets reassess the pace of monetary easing and the true earnings potential of AI investments, volatility in US equitiesтАФespecially in tech-heavy indicesтАФis likely to remain elevated in the near term.
