Weekly Wrap-Up: Stock And Crypto Markets Tumble As AI Bubble Fears Surface
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The stock market ended Friday on a down note as investors pulled back from artificial intelligence-related investments. The S&P 500 fell 1.1% while the Nasdaq Composite dropped 1.7%. The Dow Jones Industrial Average declined 0.5%, losing 246 points.
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Both the S&P 500 and Nasdaq ended the week lower. This reversed two consecutive weeks of gains for both indexes.
Broadcom led the decline among tech stocks. The custom AI chip maker fell 11% on Friday despite posting record sales for its latest quarter. Analysts expressed concerns about specific details in the earnings report.
The company’s backlog orders totaled $73 billion. This figure raised questions among market watchers about future demand and execution.
Oracle added to the sector’s troubles after a Bloomberg report suggested delays in data center projects for OpenAI. The company denied any delays in a statement to Barron’s. Oracle shares still closed down 4.5% on Friday.
Ryan Jungk from Newfleet Asset Management explained the market’s hesitation. “The nature of this [AI] buildout is that we don’t have all that much certainty as to the speed, cost, and payback,” he told Barron’s.
Bitcoin Drops Below $90,000 Mark
Bitcoin fell below $90,000 during Friday trading. The cryptocurrency dropped 2% following the U.S. stock market open, reaching $89,800. Bitcoin had been trading around $92,500 overnight before the decline.
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Crypto-related stocks followed the broader market lower. Robinhood and Strategy both fell nearly 2%. Stablecoin issuer Circle dropped more than 5%. Coinbase showed a slight decline.
Bitcoin mining stocks also experienced losses. Hut 8 fell more than 5% while Iren and Riot dropped about 4%. Cipher and Iren both declined around 2% over the past day.
The week showed a pattern of bitcoin setting intraday lows during U.S. trading hours. This trend has led to the filing of a proposed AfterDark Hours ETF.
Consumer staples, healthcare, and materials performed better than tech on Friday. Each of these S&P 500 sectors gained less than 1%. These defensive sectors provided some stability during the tech selloff.
The Federal Reserve’s recent comments continued to influence market sentiment. Fed Chair Jerome Powell hinted at a possible rate cut pause in January during his Wednesday speech. Markets now expect only two rate cuts in 2026 instead of three.
Chicago Fed President Austan Goolsbee offered a different view. He opposed a December rate cut but said he expects more cuts in 2026 than the current median projection. Several other Federal Reserve members were scheduled to speak on Friday following the end of the blackout period.
Next week brings important economic data releases. The nonfarm payrolls and retail sales reports will both come out on Tuesday. The November consumer price index report is scheduled for Thursday release.
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