S&P 500 and Nasdaq pointed to sharp weekly drop with chip stocks

The S&P 500 and Nasdaq were on track to post steep weekly losses as chipmakers faced a new wave of selling pressure on Friday after a strong performance this quarter, with investors questioning lofty valuations and the repercussions of companies' AI spending.

Micron Technology fell 6.2% after rising more than 15% in the previous session.

Other chip stocks, including Advanced Micro Devices and Nvidia, were also lower, with the Philadelphia SE Semiconductor index down 4.7%.

Chipmakers had a tough time this week despite Micron's solid results, while Apple's decision to raise iPad and MacBook prices due to rising memory and storage chip costs fueled inflation concerns.

Apple shares fell 0.1% in early trading, following a 6.1% drop on Thursday (25), the biggest single-day loss in more than a year, as a result of price increases.

"The selloff in technology stocks reflects the prospect of higher interest rates in the future," said Peter Cardillo, chief market economist at Spartan Capital Securities.

"The market did not like Apple's price increase, as it could mean higher prices for consumers in the future."

U.S. inflation rose above 4% on an annual basis in May for the first time in three years, according to data released on Thursday, driven by higher energy prices linked to the conflict in the Middle East and keeping alive the possibility of an interest rate increase by the Fed.

The Dow Jones Industrial Average fell 0.44% to 51,691.13 points, while the S&P 500 lost 0.83% to 7,296.62 points and the Nasdaq Composite fell 1.33% to 25,021.97 points.

Source: CNN