Big Tech Stocks Started the Week with a Decline

Technology Stocks Face Selling Wave

American stocks struggled in their recovery efforts on Friday, leading to a technology-driven wave of selling. Investors are evaluating negative consumer sentiment data and the potential returns on artificial intelligence investments. The Nasdaq Composite (^IXIC) fell by 1.8%, while the S&P 500 (^GSPC) lost about 1%. The Dow Jones Industrial Average (^DJI) declined by 0.6%.

Stocks are set to close out a difficult week with losses due to ongoing concerns about the artificial intelligence bubble. Both the S&P 500 and Dow are experiencing significant weekly losses. After sharp declines of companies in the 'Magnificent Seven' like Nvidia (NVDA), the Nasdaq is heading toward its deepest loss since April.

The drop in the markets was further supported by negative consumer sentiment data released by the University of Michigan. Overall sentiment dropped by 6% to 50.3 compared to October, reaching its lowest level since 2022. The basis for this pullback was participants' negative expectations regarding their financial situations and next year's business conditions.

Friday's data came after layoffs in October reached the highest levels seen in the last 20 years. This year is being hinted at as the worst year for severance pay since 2009.

The stronger-than-expected impact of private data on Wall Street stems from the current lack of official economic updates. The Bureau of Labor Statistics plans to release the October jobs report, but the publication of data has been delayed for two months due to the government shutdown.

Among new technology developments, a total compensation package worth $1 trillion was approved for Tesla (TSLA) CEO Elon Musk. Musk is expected to advance Tesla's robotaxi and Optimus humanoid robot projects during this process, emphasizing its significance amid the artificial intelligence frenzy. Tesla shares fell by 4% on Friday.

Investors are watching for potential positive developments such as the ongoing U.S. government shutdown, possible interest rate cuts in December, and Nvidia's upcoming earnings report. However, an examination by the Supreme Court regarding the legality of customs tariff policies from the Trump era adds a layer of uncertainty.