US stocks sharply retreated from record levels seen during the week. The heavy selling wave on Friday accelerated further after strong employment data weakened expectations for interest rate cuts, causing a notable breakdown in technology shares.
The S&P 500 index closed Friday down 2.6%, while the Nasdaq fell 4.2%. This erased the record closes seen earlier in the week and ended the S&P 500’s nine-week winning streak.
Expectation Pressure on Technology Shares
The week’s first shock came with Palo Alto Networks shares dropping on Wednesday. Despite the company reporting strong results the previous evening, the management’s failure to raise the long-term financial outlook triggered selling. The stock declined 3.4% over the week.
The same pattern was observed with CrowdStrike. Although the company reported revenue above expectations and provided forward guidance, its shares faced pressure due to perceptions that results fell short of high expectations. The stock suffered double-digit losses on Thursday and declined over 8% for the week by Friday.
The sharpest reaction came from Broadcom. The company’s quarterly revenue missed expectations and its forward guidance failed to satisfy the market. Although its AI-related business segments remained strong, the stock fell 13.7% over the week, marking one of the weakest performances.
Intel also joined the list of stocks experiencing sharp declines. The newly acquired stock dropped 13.5% for the week. Despite assessments highlighting the company’s data center processor business as well-positioned in the AI era, selling pressure continued to weigh on the stock.
Divergence Among Nvidia, Arm, and Marvell
Nvidia closed the week down 2.9%, while announcements at the Computex event in Taiwan sparked a separate wave in the tech sector. When the company announced it would enter the personal computer market using Arm Holdings architecture, Arm shares surged sharply during the day.
Although Arm declined 3% for the week, it has maintained strong performance since the start of the year. Marvell Technology stood out as an exception, rising more than 28% within the same week. This rapid climb followed optimistic comments about the company’s market value.
However, the general sell-off in technology shares overshadowed this rise. Investors agreed that expectations have become very high even for stocks with strong AI themes.
New IPOs and Share Sales Weigh on the Market
Another major topic of the week was the large supply and share sales expected to enter the market. SpaceX is planned to start trading on Friday, with the company announcing it will sell 555.6 million shares at a fixed price of $135, raising about $75 billion. This transaction would value the company at approximately $1.8 trillion.
Another AI giant, Anthropic, also came into focus with IPO preparations. The company reportedly submitted a confidential filing, fueling speculation of a major share sale in the sector. Expectations that OpenAI is also preparing for an IPO further increased capital activity around AI companies.
Alphabet’s announcement of an $85 billion share sale plan to finance its AI investments caused unease in the market. The company’s shares came under pressure following the news, with investors voicing concerns that such moves could dilute existing ownership stakes.
Meta Platforms was also drawn into similar discussions. Reports that the company might consider issuing tens of billions of dollars in shares to support AI investments pressured its stock on Friday. The general market impression by the weekend was that the new supply could strain demand in the short term.
The week’s outcome combined the pressure on technology shares from rising bond yields fueled by strong employment data with the fragility created by earnings sensitive to expectations. This led to sharp losses in stocks and a dent in short-term market confidence.
