The S&P 500 index declined after a new model released by a Chinese AI startup triggered a sell-off in U.S. semiconductor stocks.
The tech-heavy Nasdaq 100 index closed down 1.5%, marking its worst weekly performance in nearly a month.
Meta Platforms Inc. led the declines among the so-called "Magnificent Seven" U.S. tech giants.
The Philadelphia Semiconductor Index fell 1.6%, extending its drop from a record high in June to 20%, a threshold that meets the definition of a bear market.
Mark Hackett, Chief Market Strategist at Nationwide, stated, "As the earnings season begins, the market is showing a pattern of small pullbacks followed by quick rebounds, indicating that bulls still hold the dominant position. However, they are waiting for clear positive signals from earnings reports before driving the stock market to new highs."
The S&P 500 index fell 1%, ending its two-week winning streak. The benchmark index closed below its 50-day moving average.
The sell-off in the chip sector has shown signs of slowing. Adam Crisafulli, an analyst at Vital Knowledge, noted that the market narrative has shifted somewhat over the past few hours, with investors beginning to assess the situation with a "more nuanced perspective."
Netflix Inc. shares closed down 7.3% on Friday after the company forecast that its sales growth would slow for a second consecutive quarter, sparking investor anxiety about the streaming giant's future.
Sweetgreen Inc. shares rose 14%, halting a four-day losing streak. The gain came after U.S. regulators stated that a parasite outbreak that sickened thousands across multiple states had been traced back to shredded romaine lettuce served at Taco Bell restaurants.
At the close, the S&P 500 index was down 1% at 7,457.69 points.
The Dow Jones Industrial Average fell 0.8% to 52,146.42 points.
The Nasdaq Composite Index declined 1.4% to 25,520.24 points.
The Nasdaq 100 Index dropped 1.5% to 28,592.66 points.
The Russell 2000 Index decreased 0.4% to 2,962.217 points.
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