Major US stock indexes saw significant declines on Friday, with the S&P 500 falling 2.6% and the Dow Jones Industrial Average dropping 694 points. The tech-heavy Nasdaq 100 plunged 4.7%, marking its worst day since April 2025 and capping its worst week since March 2025. This sell-off was triggered by a strong jobs report that increased the likelihood of a Federal Reserve interest rate hike, with futures markets projecting a 60% chance of a hike by October's Fed meeting and 43% by December, up from 26% a month ago.
The prospect of higher interest rates made borrowing more expensive, particularly for AI firms, leading to a broad sell-off in the sector. Nvidia, the world's largest publicly traded company, slid about 6%, while Oracle lost 10% and IBM dropped 7%. Other AI-linked companies such as Broadcom, Marvell, Arm, Micron, SanDisk, Intel, AMD, and Qualcomm all declined more than 10%. Broadcom's shares fell 7%, bringing its weekly loss to over 13% after a lackluster earnings report.
The selling pressure intensified in the late afternoon following reports that Meta Platforms, owner of Facebook and Instagram, was considering raising tens of billions of dollars in a stock offering to bolster its AI initiatives, causing Meta shares to decline over 6%. Despite Friday's rout, major indexes remain near record highs, with the S&P 500 still up about 8% and the Nasdaq nearly 10% year-to-date. The upcoming IPO of SpaceX, valued at over $1.7 trillion, will test market appetite for large AI plays, with Anthropic and OpenAI also expected to go public later this year.
