The S&P 500 closed lower on Friday after a volatile week. Investors reassessed the artificial intelligence trade following turmoil surrounding NVIDIA (NASDAQ: NVDA), while also monitoring the Federal Reserve's interest rate outlook.
The tech-heavy Nasdaq 100 fell 1.2% on Friday, and the S&P 500 dropped 0.4%. Despite the declines, both indexes still posted gains for the week. The Dow Jones Industrial Average rose 0.1%.
NVIDIA (NASDAQ: NVDA) suffered its worst week since the market selloff triggered by tariffs in April 2025, with its market capitalization falling below $4 trillion after shedding more than $500 billion during the week. News surrounding NVIDIA and former CEO Jensen Huang shook investor confidence in the world's largest AI chipmaker.
Market concerns about NVIDIA's future leadership intertwined with investor doubts about the financing costs of broader AI infrastructure buildout.
"There are several different factors weighing on chip and data center-related stocks today," wrote Nicole Tanenbaum, partner and chief investment officer at Chequers Financial Management. "First is clearly the uncertainty around NVIDIA's leadership transition, which could have implications for the broader AI ecosystem."
Shares of NVIDIA suppliers extended their declines, and even competitors such as Broadcom and AMD fell on Friday after rising the previous day.
Still, some investors believe this week's volatility was merely part of a market rotation that began before NVIDIA became the center of attention.
Fresh inflation data released on Friday reduced the risk of a 50-basis-point rate hike by the Federal Reserve next month, offering investors some comfort.
At the close, the S&P 500 fell 0.4% to 7,561.67; the Dow Jones Industrial Average rose 0.1% to 52,347.55; the Nasdaq Composite dropped 0.9% to 25,136.27; the Nasdaq 100 declined 1.2% to 27,943.74; and the Russell 2000 slipped 0.3% to 2,790.49.
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