The Nasdaq fell as investors sold chip stocks due to worries about AI spending, while the S&P 500 showed minimal gains ahead of major earnings reports.
Singapore, Singapore Jul 25, 2026 ALN: [NEW YORK] The tech-heavy Nasdaq experienced a notable decline on Friday, July 24, as investors reacted to mounting concerns surrounding the substantial spending on artificial intelligence (AI) technologies. This apprehension came just ahead of a significant wave of earnings reports from major technology companies, leading to a sell-off, particularly in chip stocks. Meanwhile, falling oil prices provided some support to Wall Street, despite ongoing hostilities in the Middle East that have raised geopolitical tensions.
The S&P 500 index saw minimal advancement, largely influenced by the performance of its technology sector, which underperformed the broader market, finishing down 0.9 percent. The technology index's sluggish performance was primarily driven by the decline in chip stocks, which have become a focal point of investor concern amid the escalating costs associated with AI development.
Investors are keenly anticipating earnings results from several megacap companies, including Microsoft, Amazon.com, Meta, and Apple, which are scheduled to report their financial performance in the coming week. However, enthusiasm has diminished since Alphabet, the parent company of Google, announced a significant increase in its capital spending plans, even as it continues to experience cash burn. This announcement has raised questions about the sustainability of such spending and its potential return on investment.
Peter Andersen, CEO of Andersen Capital Management, articulated the growing unease among investors regarding the financial implications of ramping up capital expenditures for AI. He noted, "People are thinking, how do we make sense of all this spending, and how much more patient do we have to be before we actually see it translate to actual profits?" Andersen suggested that the previous "fear of missing out" on technology investments is now morphing into a "fear of massive overbuilding," as stakeholders grapple with the realities of financial performance versus speculative growth.
In a more optimistic note, Intel, a leading chipmaker, forecasted quarterly profit and revenue figures that exceeded Wall Street estimates and outlined plans to increase spending over the next two years. Despite this bullish outlook, Intel's shares fell sharply, closing down 7.9 percent on Friday. This decline was in line with the broader trend in the semiconductor sector, as represented by the Philadelphia SE Semiconductor index, which dropped 4.5 percent.
The Dow Jones Industrial Average managed to gain 235.6 points, or 0.5 percent, closing at 51,947.25. The S&P 500 gained a mere 3.68 points, or 0.05 percent, to finish at 7,411.98, while the Nasdaq Composite lost 161.87 points, or 0.6 percent, ending at 24,975.82. Over the course of the week, the Dow experienced a 0.4 percent decline, marking its third consecutive weekly loss. Similarly, the S&P 500 and the Nasdaq both recorded their second consecutive week in the red, with the S&P falling 0.6 percent and the Nasdaq losing 2 percent.
Among the S&P 500’s 11 major industry indices, the real estate sector emerged as the strongest performer, advancing by 2.4 percent. A standout within this sector was Digital Realty Trust, which saw its shares rally by 11 percent after raising its full-year forecast for funds from operations. This positive development highlights a potential shift in investor focus toward sectors that may offer more stable returns amidst the volatility in technology stocks.
The materials sector also performed well, rising by 1.4 percent as investors shifted their attention to paper and packaging companies. International Paper led the sector with an impressive 11.2 percent increase, making it the S&P 500's biggest percentage gainer for the day. Following closely was the U.S.-traded shares of Smurfit Westrock, which added 11.1 percent, indicating a robust performance in the packaging industry.
Adding to the market's complexity, crude oil futures experienced a 3 percent drop on the day, as traders took profits following a significant rally over the preceding five sessions. This decline occurred alongside reports that China was advocating for the resumption of stalled U.S.-Iran peace talks. However, geopolitical tensions remained high, as U.S. missiles struck targets in Iran following President Donald Trump's vow of "major military punishment" for Tehran and its Houthi allies in Yemen. Such geopolitical developments have historically influenced oil prices, which in turn affect consumer and corporate spending.
In addition to these market dynamics, the Trump administration has implemented new tariffs of 10 percent and 12.5 percent on goods from 60 trading partners, citing insufficient enforcement of forced-labor bans. This move follows the expiration of a temporary 10 percent global tariff, adding another layer of uncertainty for businesses and investors alike.
Recent economic data indicated that activity in the U.S. services sector accelerated in July, bolstered by spending related to the FIFA World Cup and the Independence Day holiday. Conversely, the manufacturing sector's growth rate eased to its slowest pace since March, raising concerns about the overall economic outlook.
Among other individual gainers, SLB shares climbed 11 percent after the oilfield services firm reported second-quarter profits that exceeded expectations. This performance underscores the potential for recovery in sectors that are less directly impacted by the fluctuations in technology and geopolitical tensions.
Overall, advancing issues outnumbered decliners on the New York Stock Exchange by a ratio of 1.32-to-1, with 161 new highs and 198 new lows. On the Nasdaq, 2,174 stocks rose while 2,718 fell, indicating a broader trend of declines among tech stocks. The S&P 500 recorded 18 new 52-week highs and six new lows, while the Nasdaq Composite noted 78 new highs and 205 new lows. Trading volume on U.S. exchanges reached 15.03 billion shares, compared to the 20-session moving average of 18.22 billion shares, reflecting a shift in investor sentiment and trading patterns.
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