Wall Street wrapped up last week with a modest pullback, as a rotation away from artificial intelligence and megacap technology stocks weighed on the broader market.
The S&P 500 fell 0.52 percent in Friday's session to close at 7,623.68, while the Nasdaq Composite slipped 0.21 percent and the Dow Jones Industrial Average dropped 1.23 percent. For the week overall, the S&P 500 declined about 0.5 percent, with selling concentrated in large-cap growth and AI related names while defensive and value stocks outperformed. Despite the pullback, the S&P 500 remains up 11.4 percent for the year and sits only 2.5 percent below the all-time high it reached on October 6.
The sector moves told the story of the week: energy stocks led with a 2.6 percent gain on Friday, followed by technology, while consumer staples, communication services, and consumer discretionary names lagged. The 10-year Treasury yield rose three basis points to 4.99 percent, a combination that analysts say often signals investor concern about interest rates staying elevated even as risk appetite otherwise looked intact. Among individual stocks, Crown Castle, CrowdStrike, and Palo Alto Networks were among Friday's top gainers, while Bloom Energy and Comfort Systems USA were among the session's steepest decliners, with Comfort Systems down nearly 30 percent over the past month.
Market strategists tracking a broad set of indicators say most of their signals remain positive even after the recent softness, suggesting many investors expect buyers to return after the pullback in AI and growth names runs its course.
Investors will be watching whether the rotation out of AI and big technology stocks continues into this week, and whether Treasury yields near 5 percent put further pressure on growth sectors.
Why did AI stocks underperform last week?
Investors rotated into defensive and value sectors amid broader concerns about AI spending and elevated interest rates, pulling money away from large-cap growth and AI names.
Is the market still near record highs?
Yes, the S&P 500 is only about 2.5 percent below the record high it set on October 6, despite last week's pullback.