Nasdaq Falls 2.2% in Worst Week Since June as AI Spending Fears Shake Markets

The Nasdaq fell 2.2% this week, its worst weekly performance since June, as investors sold technology stocks over fears that spending on artificial intelligence has gone too far.

The S&P 500 dropped 1.1% for the week, and the Dow Jones Industrial Average fell 176 points, or 0.3%, according to Barron’s live market coverage. The Nasdaq also ended a four-week winning streak. Friday’s selloff spread from AI hardware names into software stocks as traders shed popular positions across big tech.

CoreWeave fell again amid concerns about the cost of AI infrastructure, and the iShares Semiconductor ETF declined for a ninth straight day, its longest losing streak in two decades. For readers confused about the products on the screen, here is how ETFs differ from mutual funds.

Investors push back on AI budgets

“The market is burnt out on AI,” Nicholas Colas, co-founder of DataTrek Research, said in Friday coverage. He added that equity investors are not used to acting as venture investors, and many are unwilling to keep funding what he called the industry’s “science project.”

The drop comes as Meta and Tesla prepare to kick off Magnificent Seven earnings next week, putting AI capital spending under heavier scrutiny.

Volatility gauge climbs past 20

The CBOE Volatility Index moved above 20, a level that signals rising expectations of market swings, Barron’s reported. Within the market, money moved into energy, utilities and consumer staples.

Bond yields rose Friday but ended the week lower. The 2-year Treasury yield finished at 4.734%, the 10-year at 5.097%, and the 30-year at 5.436%, with the 30-year posting its biggest one-week decline in the data Barron’s cited.

Reporting based on coverage by Barron’s.