Wall Street has closed sharply lower, with CoreWeave, Broadcom and other AI-related technology stocks under renewed pressure, while a jump in oil prices spooked traders heading into the weekend.
The Nasdaq extended losses from earlier in the week, hammered by concerns that debt-laden AI infrastructure companies may not turn profits in time to repay debts, particularly with borrowing costs expected to rise.
Nvidia-backed CoreWeave slumped, also adding to recent losses. The data centre operator's bonds sold off sharply this week, pushing yields above 15 per cent.
Broadcom fell and the PHLX chip index fell for an eighth straight day.
Investors on Friday were also watching oil prices jump more than three per cent due to Middle East supply worries.
"There is some fear in the market," said Rob Haworth, senior investment strategist at US Bank Wealth Management in Seattle.
"High oil prices, in particular, tend to weigh on the price/earnings multiple of stocks, and so I think you have investors looking to be cautious into the weekend rather than take more risk."
Adding to concerns around AI financing, some current Anthropic investors and prospective investors are weighing a lower valuation for the company in its upcoming IPO, Reuters reported, citing people familiar with the matter.
According to preliminary data, the S&P 500 lost 85.44 points, or 1.10 per cent, to end at 7,658.62 points, while the Nasdaq Composite lost 572.99 points, or 2.15 per cent, to 26,137.85. The Dow Jones Industrial Average fell 189.01 points, or 0.36 per cent, to 51,990.05.
Third-quarter earnings season shifts into gear next week with reports from Tesla, Meta Platforms and Procter & Gamble. Analysts on average see quarterly earnings surging more than 30%, driven by AI-related megacaps, according to LSEG data.
While the S&P 500 remains up about 12 per cent in 2025, most of that gain has come from AI-related tech stocks, and the index's median component has climbed only about six per cent, year to date. About 185 S&P 500 stocks have lost ground in 2025.
Hotter-than-expected consumer and producer inflation reports this week showed price pressures were extending beyond energy commodities.
Federal Reserve Chair Kevin Warsh on Friday voiced optimism about US economic strength and surprise about how well global economies have been "hanging in there" during a lingering energy shock and tighter monetary policy to fight inflation.
Markets increasingly expect the Fed to keep interest rates unchanged this month. Barclays now expects 25-basis-point hikes each in December and January.
Tesla dropped after the electric-vehicle maker unveiled a redesigned Roadster, powered by rocket-style thrusters, developed in collaboration with SpaceX.
Netflix appointed former Disney executive Peter Rice as chief content officer on Thursday. Its shares dipped.