Wall Street extended its decline on Friday as a pullback on stocks associated with the AI boom, which has driven many of the gains so far this year, morphed into a larger risk-off sentiment.
Semiconductor shares, which have led the broader market’s move in recent sessions, initially led the selloff, which broadened as the session progressed.
All three major U.S. stock indexes closed lower on the day and posted weekly losses.
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The Philadelphia SE Semiconductor Index (.SOX), opens new tab logged its steepest weekly loss in over a year, and has tumbled over 18% so far in July. Even so, the index remains up nearly 65% year-to-date, compared with the S&P 500’s nearly 9% gain over the same time frame.
The SOX closed 20.2% below its June 22 record closing high, confirming the index entered a bear market on that date.
Some investors in the artificial intelligence space have begun positioning for a slowdown in the nearly trillion-dollar spending boom, with some active managers already scaling back their exposure, according to a Reuters analysis.
