Closing Bell: Tech, Chips Slide as Inflation, AI Concerns Keep Investors Defensive

U.S. stocks traded lower Friday as another sharp semiconductor selloff pressured technology shares, while hotter year-over-year wholesale inflation and rising Treasury yields kept investors tilted toward defensive areas of the market. 

The S&P 500 (SPX) fell 0.40%, while the tech-heavy Nasdaq-100 (NDX) dropped 1.22%. The Russell 2000 (RUT) declined 0.31%, while the Dow Jones Industrial Average ($DJI) moved 0.10% higher. 

Semiconductors were the clear laggard, with the PHLX Semiconductor Sector Index (SOX) tumbling 3.43% as the AI trade remained under pressure following the resignation of Jensen Huang as CEO of Nvidia (NVDA). Among S&P 500 sectors, Information technology fell 1.70%, Industrials lost 0.42%, and Consumer Discretionary declined 0.45%. Investors instead favored more defensive groups, with consumer staples gaining 1.39%, energy rising 0.96% and financials advancing 0.80%. 

The 10-year Treasury yield climbed roughly 5 basis points to 5.15%, while the U.S. Dollar Index gained 0.20% to 103.38 as expectations for tighter Federal Reserve policy continued to support the dollar. The CBOE Volatility Index (VIX) rose more than 3% to 19.30, keeping volatility close to the important 20 threshold. WTI crude up slightly to about $89 per barrel, while gold was slightly lower near $3,880 an ounce. 

Inflation remained another concern. The Producer Price Index rose 0.3% in October from September, slightly below expectations, but wholesale prices were still 6.5% higher from a year earlier, the highest annual increase since November 2022. The combination of persistent inflation and a resilient economy continues to complicate expectations for Federal Reserve policy. See Inflation, Fed Hikes & the Fixed-Income Opportunity   

Three things to watch from today’s market: 

Microsoft Makes Progress Restoring Global Services 

Microsoft (MSFT) said it was seeing “continued recovery progress” Friday as it worked through a major worldwide Microsoft 365 outage that stretched into a second business day. Outlook, Teams, Copilot and other services were affected across multiple regions, disrupting businesses and government operations while Microsoft worked to return service levels toward normal. Shares of Microsoft were down 0.24% Friday and off 1.27% for the week. See What Microsoft Can Learn From CrowdStrike’s Outage | Market On Close 

AMD and Broadcom Lead Chip Selloff 

Advanced Micro Devices (AMD) sank nearly 10% Friday, while Broadcom (AVGO) fell roughly 6% as selling spread across semiconductor and AI-related shares. Broadcom faced additional pressure after Rothschild Redburn downgraded the stock to Neutral from Buy and cut its price target to $398 from $595, citing concerns surrounding AI financing and future earnings growth. See Ca$htag$: AMD, AVGO, GOOGL Primes to Take NVDA Market Share in AI Chips  

Cerebras Surges on Earnings and Microsoft Deal 

Cerebras Systems (CBRS) surged after reporting stronger-than-expected third-quarter results, raising its full-year revenue outlook and identifying Microsoft as a new cloud customer. Cerebras lifted its 2026 adjusted revenue forecast to $940 million - $960 million, while quarterly adjusted sales rose 70% as demand for AI inference and cloud computing accelerated. See Tech Earnings from AMAT, CSCO, CBRS: A Litmus Test for AI Ecosystem? 

This material is intended for informational purposes only and should not be considered a personalized recommendation or investment advice. Investors should review investment strategies for their own particular situations before making any decisions.

Schwab Network is brought to you by Charles Schwab Media Productions Company (“CSMPC”). CSMPC is a subsidiary of The Charles Schwab Corporation and is not a financial advisor, registered investment advisor, broker-dealer, futures commission merchant, or forex dealer member.

Charles Schwab Media Productions Company and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions.

Data contained herein is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. All events and times listed are subject to change without notice.