Nasdaq Sees Weekly Decline as AI Stock Rally Under Scrutiny
The Nasdaq concluded the week on a subdued note, registering a slight decrease on Friday. This marks the most significant weekly percentage decline since early April, attributed to investor concerns over the potential sustainability of the recent surge in artificial intelligence shares, contrasted with a modest retreat in U.S. Treasury yields.
Technology stocks, particularly those linked to semiconductors, faced the brunt of these market fluctuations, with the Nasdaq experiencing an approximate 3% drop over the week.
Since April, when President Donald Trump implemented sweeping tariffs, the Nasdaq has ascended by over 50%, buoyed by fervent optimism surrounding AI, which propelled markets to unprecedented heights.
Recent commentary from Nvidia’s CEO, Jensen Huang, warning that China could surpass the U.S. in the AI sphere, has exacerbated the situation. Market strategist Michael O’Rourke at JonesTrading noted, “The ongoing selloff stems from concerns about China’s competitive edge in AI.
It signifies a recalibration of valuations within this sector, driving most of the observed weakness.” He further added, “You might interpret this as profit-taking, considering the robust performance of stocks, particularly in this domain, throughout the year.”
Additionally, Bitcoin has also recorded a downturn over the week, though it notably rose 2.09% on Friday, reaching $103,197.07.
During the trading session, all three principal U.S. stock indices faced significant reductions. However, losses fluctuated, with the S&P 500 and Dow reversing their downturns late in the day amid reports signaling a resolution to the congressional deadlock, which has precipitated the longest federal government shutdown in U.S. history.
- Dow Jones Industrial Average: rose 74.80 points (0.16%) to 46,987.10
- S&P 500: rose 8.49 points (0.13%) to 6,728.81
- Nasdaq Composite: fell 49.45 points (0.21%) to 23,004.54
Globally, the MSCI index depicting stock performance across nations declined by 0.68 points (0.07%) to 991.32, while the pan-European STOXX 600 index fell by 0.55%.
Dismal China trade data revealed the detrimental impacts of Trump’s tariffs, with China’s exports contracting by 1.1% in October—the worst performance since February—casting a shadow over Asian markets and highlighting the manufacturing sector’s dependency on American consumers.
In the U.S., Treasury yields declined subtly, prompted by surveys indicating a decline in consumer sentiment, in part due to the ongoing government shutdown, amidst investor trepidations regarding burgeoning debt supply.
The preliminary consumer sentiment index from the University of Michigan for November dipped to 50.3, the lowest figure since June 2022. This downturn largely stemmed from a significant drop in perceptions concerning current economic conditions, which fell to their nadir.
Benchmark U.S. 10-year note yields declined by 0.2 basis points, settling at 4.091%, down from 4.093% late Thursday.
The U.S. dollar also weakened against major currencies, having firmed somewhat since last week, when Federal Reserve Chair Jerome Powell recognized the inherent risks of further easing.
Key economic data releases are hindered by the shutdown, yet survey signals suggest robustness that might argue against rate cuts in the Federal Reserve’s upcoming December meeting.
On Friday, the dollar index, which measures the dollar against a collection of currencies like the yen and euro, fell by 0.11% to 99.57. The euro increased by 0.14%, reaching $1.1563, while the dollar appreciated by 0.25% against the Japanese yen, trading at 153.45.
In commodities, oil prices rebounded following a midday decrease, supported by hopes that Hungary could use Russian crude oil during President Trump’s meeting with Hungarian Prime Minister Viktor Orban at the White House. U.S. crude gained 32 cents, closing at $59.75 per barrel, while Brent crude rose 25 cents, settling at $63.63. Gold prices also exhibited an upward trend.
Source link: M.economictimes.com.
