Wall Street is trying to find its footing Monday after a bruising end to last week, when doubts about the pace and financing of artificial intelligence spending triggered the steepest technology selloff in months.
The Nasdaq Composite dropped 2.15 percent to 26,140.03 on Friday, while the S&P 500 fell 1.09 percent to 7,659.44 and the Dow Jones Industrial Average slipped 0.34 percent to 52,002.41, leaving the S&P 500 down about 1.9 percent for the week. Chip stocks led the decline, with a major semiconductor index suffering its longest losing streak since 2008, as investors grew more cautious about the enormous borrowing being used to finance new AI data centers and computing infrastructure. On Monday morning, futures pointed to a partial rebound, with Nasdaq 100 futures up about 1.3 percent and S&P 500 futures up roughly 0.8 percent, as traders looked ahead to a pivotal week of corporate earnings that could determine whether the AI-led rally can regain its footing.
The mood was complicated by fresh data showing sticky inflation pressure, which kept a cautious tone over the market even as futures improved, with attention focused squarely on what it means for the path of interest rates. Oil prices stayed elevated, supported by Gulf tanker attacks and the weekend's Ukrainian strikes on Russian oil facilities, adding another layer of uncertainty for investors already nervous about valuations in AI-exposed stocks. In Asia, markets were mixed: Japan's Nikkei 225 pared an early drop of more than 2 percent to close down about 0.7 percent, South Korea's Kospi gained roughly 0.6 percent, and China's Shanghai Composite rose about 0.2 percent after data showed the country's economy grew faster than expected.
Underlying the selloff is a broader debate about how AI infrastructure is being financed. Database and cloud giant Oracle has taken on substantial debt to build out AI computing capacity, a buildout that has made investors increasingly uneasy and that commentators have described as a potential weak link in the wider AI-fueled economy, given how reliant the sector has become on continued, heavy capital spending.
This week's corporate earnings from major technology and semiconductor companies are expected to be the key test of whether investors are willing to keep funding the AI buildout at its current pace.
Why did tech stocks sell off last week?
Investors grew more cautious about the scale of borrowing being used to finance AI data centers and computing infrastructure, and about elevated valuations among AI-exposed companies.
Is the market recovering Monday?
Futures pointed to a partial rebound in early trading, but strategists describe the recovery as fragile ahead of a heavy week of corporate earnings.