AI spending worries spur defensive rotation
SPY•Wall Street’s technology sector fell sharply Friday after Amazon’s spending plans and Intel’s cash-burn warning renewed concerns about the cost of AI investment and the timing of returns. The Nasdaq was down more than 2%, the S&P 500 more than 1%, and the semiconductor index more than 5%.
1. Tech shares lead declines
Amazon’s aggressive spending plans and Intel’s warning on cash burn prompted a retreat from AI-linked stocks. The Nasdaq was down more than 2%, technology fell more than 3%, and the PHLX Semiconductor Index lost more than 5%.
2. Investors favor defensive sectors
A majority of S&P 500 sectors were lower, led by technology and consumer discretionary. Staples, energy and healthcare each rose more than 1.3%; healthcare and energy were on track for record closing highs, as was the ProShares S&P 500 Dividend Aristocrats ETF.
3. Weekly market performance
For the week, the Nasdaq was down more than 1%, the Dow was slightly lower and the S&P 500 was flat. The Nasdaq and S&P 500 were tracking monthly losses for October, while the Dow remained in positive territory.
