AI spending concerns weigh on tech
The tech-heavy Nasdaq fell as investors sold chip stocks on worries about massive spending on artificial intelligence ahead of the next batch of megacap earnings reports, while falling oil prices provided Wall Street with some support even as Middle East hostilities continued.
The S&P 500 barely advanced on Friday and its biggest weight came from the S&P 500 technology index, which underperformed the broader market to finish down 0.88 per cent, as chip stocks fell.
While investors looked ahead to next week's results from megacaps Microsoft, Amazon.com, Meta and Apple Inc, their enthusiasm has waned since Alphabet's announcement, late on Wednesday, of a massive hike to its capital spending plans even as it burns cash.
The Dow Jones Industrial Average rose 235.60 points, or 0.46 per cent, to 51,947.25, the S&P 500 gained 3.68 points, or 0.05 per cent, to 7,411.98 and the Nasdaq Composite lost 161.87 points, or 0.64 per cent, to 24,975.82. For the week, the Dow fell 0.4 per cent, its third straight weekly loss.
The S&P 500 and the Nasdaq registered their second straight week in the red with the S&P falling 0.6 per cent while the Nasdaq lost two per cent. Among the S&P 500's 11 major industry indexes, real estate was the strongest, with a 2.4 per cent advance.
Real estate and materials lead gains
The sector's leading gainer was Digital Realty Trust, which rallied 11 per cent after it raised its full-year forecast for funds from operations. The second-biggest sector gainer was materials which rose 1.44 per cent as investors turned their attention to paper and packaging companies. International Paper led the pack with an 11.2 per cent advance, making it the S&P 500's biggest percentage gainer on theday.
It was followed closely by the US-traded shares of paper company Smurfit Westrock, which added 11.1 per cent. Also providing some relief was a three per cent drop in crude oil futures on the day while traders booked profits from a massive rally in the last five sessions and after sources said China was pushing to resume stalled US-Iran peace talks.
Still, US missiles struck targets across Iran after President Donald Trump vowed "major military punishment" for Tehran and its Houthi allies in Yemen. Oil prices had rallied in the prior five sessions.
"Whatever the headlines are involving the conflict right now, that drives oil and then oil drives financial markets," said Andersen, adding that swings in oil prices can impact consumer and corporate spending.
Tariffs and economic data in focus
Also, the Trump administration imposed new tariffs of 10 per cent and 12.5 per cent on goods from 60 trading partners, citing lax enforcement of forced-labour bans. The move came as a temporary 10 per cent global tariff expired.
Friday's data showed that activity in the US services sector accelerated in July, aided in part by spending around the FIFA World Cup and the Independence Day holiday, while the pace of growth in the manufacturing sector eased to the slowest since March.
Among other individual gainers, SLB shares climbed 11 per cent after the oilfield services firm beat expectations for second-quarter profit.
Advancing issues outnumbered decliners by a 1.32-to-1 ratio on the NYSE where there were 161 new highs and 198 new lows. On the Nasdaq, 2,174 stocks rose and 2,718 fell as declining issues outnumbered advancers by a 1.25-to-1 ratio. The S&P 500 posted 18 new 52-week highs and six new lows while the Nasdaq Composite recorded 78 newhighs and 205 new lows. On US exchanges 15.03 billion shares changed hands compared with the 18.22 billion moving average for the last 20 sessions.
