Investors pulled out of technology stocks on Friday, driving the Nasdaq Composite down more than 650 points, or 2.4%, to 26,116 in afternoon trading. The index was headed for its first weekly loss in five weeks as concerns mounted over the heavy borrowing associated with the artificial intelligence sector. The broader S&P 500 fell 1.2% and the Dow Jones Industrial Average dropped 0.6%.
The selling pressure centered on companies financing the rapid buildout of data centers required for AI computing power. Adam Crisafulli, head of Vital Knowledge, told CBS News that neocloud companies are financing much of their capital expenditures through debt and equity issuance rather than cash flow, raising concerns about mounting debt. CoreWeave, a provider of computing power for AI models, saw shares slide 12% on Friday, extending a weekly loss of nearly 26%.
Other major chipmakers also faced declines. Micron Technology fell 4.1%, Advanced Micro Devices dropped 5.1%, Intel lost 4.7%, and Broadcom was down 3.6%. Tesla shares fell 2.8% following the unveiling of a new Roadster sports car designed to thrust itself into the air.
Inflation data added to the market's unease, showing signs that U.S. prices are moving further away from the Federal Reserve's 2% annual target. Yields on 10-year U.S. Treasury bonds held steady at 5.1% on Friday after surging to their highest level in more than two decades earlier in the month amid concerns over inflation and rising government debt.
Some economists suggested that recent hot inflation readings could spur the Federal Reserve to raise interest rates at its next meeting on October 28-29. However, most Wall Street traders expect the central bank to keep its short-term rate unchanged at that time. According to CME FedWatch, which tracks Fed funds futures prices, the odds of a rate hike at the December meeting have jumped to 74.3% from 50.2% a month ago.
Federal Reserve Chairman Kevin Warsh declined to signal any shift in monetary policy during his appearance at a gathering of financial leaders in Bangkok. The central bank had previously increased rates in September, setting the federal funds rate between 3.75% and 4%, a peak not seen since December 2025.