Stock market today: AI sell-off deepens as oil jumps
The stock market today fell as AI chip darlings deepened their sell-off while oil surged on Middle East war fears. The S&P 500 dropped 1%, the Nasdaq sank 1.4%, and Brent crude jumped 4.6% to $88.10 after China's Moonshot unveiled its Kimi K3 AI model.
Key Takeaways
- The S&P 500 fell 1% to 7,457.69, ending its first losing week in three and only its third since late March.
- Nvidia dropped 2.2% and briefly lost the top market-value ranking to Apple before finishing back above it.
- Moonshot's open-source Kimi K3 model rattled tech, echoing the DeepSeek scare of early 2025.
- Brent crude jumped 4.6% to $88.10 as U.S. strikes on Iran raised Strait of Hormuz worries.
- A semiconductor index fell into a technical bear market, down about 20% from late-June highs.
Wall Street's AI winners took another hit Friday, pulling major indexes lower worldwide, according to AP News. Just days earlier, the S&P 500 had climbed within 0.5% of its all-time high.
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Why did the stock market fall today?
Chip stocks and other AI favorites remained at the center of shaky trading. Investors have worried for weeks that prices shot too high and that demand for memory and processors may prove unsustainable if AI delivers less profit and productivity than promised.
The Dow Jones Industrial Average dropped 406 points, or 0.8%, to 52,146.42. The Nasdaq composite sank 361.70 points to 25,520.24. Applied Materials sank about 5.6%, while Micron slipped 0.5% after swinging sharply during the session.
Earnings disappointments added pressure. Netflix sank 7.3% after revenue missed expectations and summer forecasts came in light. Intuitive Surgical plunged 14.1% on procedure-growth worries, and SpaceX fell 5.4% to its lowest level since its Nasdaq debut.
What sparked the AI chip sell-off?
News of Chinese startup Moonshot's Kimi K3 model further shook markets. Similar to DeepSeek's early-2025 launch, a low-cost open-source rival could hurt demand for chips and AI infrastructure spending.
Asia felt the shock first. Indexes tumbled 6.5% in Taipei, 4% in Tokyo, and 3% in Shanghai, with Taiwan Semiconductor Manufacturing Co. dropping 7.3%. South Korea's market was closed for a holiday.
CNN reported a popular semiconductor index fell 1.6% Friday and entered a technical bear market after a 20% drop from late-June records. Wells Fargo's Sameer Samana said markets "were just looking for any excuse to sell" after semis had "run too far, too fast."
How high did oil prices climb?
Brent crude, the international standard, jumped 4.6% to settle at $88.10, up from roughly $76 a week ago. WTI rose about 4.5% to $82.49. Both posted their biggest weekly surges in months amid the Iran conflict.
The United States expanded airstrikes against Iran early Friday, hitting bridges and a key port tower. That raised fresh fears oil tankers may struggle to use the Strait of Hormuz.
Higher oil has pushed Treasury yields and mortgage rates up in recent days, though the 10-year yield eased Friday to 4.55%. Consumer sentiment improved more than expected and inflation expectations eased, a key watchpoint for the Federal Reserve.