S&P 500 slips as chip stocks fall on AI spending concerns

NEW YORK: The S&P 500 ended slightly lower on Friday as AI-linked chip stocks fell sharply, while gains in Moderna and other healthcare shares limited broader market losses.

The S&P 500 declined 0.05 per cent to 7,353.95 points. The Nasdaq Composite fell 0.24 per cent to 25,297.62 points, while the Dow Jones Industrial Average slipped 0.09 per cent to 51,876.11 points.

The PHLX chip index dropped 5.3 per cent, reflecting concerns over heavy spending on AI data centres and the time it may take for companies to generate returns from those investments.

For the week, the S&P 500 lost 2.05 percent and the Nasdaq fell 4.7 per cent. The chip index declined 7.9 per cent, its worst weekly performance since early April.

A report that OpenAI was considering delaying its public debut until next year also weighed on sentiment around AI-linked stocks.

Apple rose 3.1 per cent, recovering part of its Thursday losses after the company raised iPad and MacBook prices, citing higher memory and storage chip costs.

Moderna surged nearly 13 per cent to its highest level since 2024 after the drugmaker held an investor event and presented its pipeline.

Eight of the 11 S&P 500 sector indexes closed lower. Industrials led the decline with a 3.41 per cent fall, followed by materials, which dropped 2.45 per cent.

Inflation concerns also remained in focus after data on Thursday showed US inflation rose above 4 per cent in May, partly due to higher energy prices linked to the Iran war. Although oil prices have since fallen as Middle East tensions eased, Apple’s price increases kept supply-side inflation concerns alive.

Traders are now pricing in one 25-basis-point Federal Reserve rate hike and a nearly 27 per cent chance of another increase by year-end, according to LSEG-compiled data.

A survey showed US consumer sentiment recovered from record lows in June, though households remained concerned about the high cost of living.

ON Semiconductor dropped nearly 24 per cent after agreeing to acquire Synaptics in an all-stock deal valued at about $7 billion. Synaptics fell 3.7 per cent.

SpaceX edged up 0.15 per cent ahead of its inclusion in Russell indexes, which is expected to require passively managed index funds to buy billions of dollars’ worth of the stock.

Advancing stocks outnumbered declining ones in the S&P 500 by a 1.8-to-one ratio. The S&P 500 recorded 35 new highs and five new lows, while the Nasdaq posted 263 new highs and 169 new lows.

Trading volume on US exchanges stood at 30.1 billion shares, above the 20-session average of 23.1 billion shares.