Wall Street Ends Lower as AI Spending Jitters, Fed Uncertainty Weigh on Sentiment

Wall Street’s main indexes closed lower on Friday, ending a rocky week dominated by renewed doubt over the artificial intelligence investment theme and anticipation of the Federal Reserve’s interest-rate decision. The tech-heavy Nasdaq Composite posted a slim loss a day after suffering its biggest one-day drop since June, as worries flared about the cost of financing heavy AI-related capital spending.

The Dow Jones Industrial Average fell 652.82 points, or 1.23%, to 52,215.16. The S&P 500 lost 39.75 points, or 0.52%, to 7,623.68. The Nasdaq Composite dropped 53.52 points, or 0.21%, to 25,955.34.

For the week, the S&P 500 fell 0.5% and the Nasdaq dropped 0.7%. The blue-chip Dow bucked the trend, rising 0.4% for its third straight weekly gain.

Tech Steadies but Broader Market Under Pressure

The S&P 500 technology sector posted a 0.35% gain on Friday, offering some respite after the sharp selloff. But most other sectors declined. Consumer staples, consumer discretionary and financials each fell well over 1%.

“There is still fallout from the questioning of the AI trade,” said Kristina Hooper, chief market strategist at Man Group. “There’s certainly the potential that we see less invested in an AI data center build-out next year than has been projected. So I certainly think that’s giving pause.”

Investors now face a busy earnings week. About one-third of S&P 500 companies are scheduled to report quarterly results, including Alphabet, Microsoft and Amazon — three AI hyperscalers whose capital spending forecasts will be closely watched.

Telcos Slide, Energy Hits Record

Telecommunications stocks weighed on the communication services sector after a report that SpaceX was seeking thousands of cell sites for a fourth wireless carrier. Shares of AT&T and T-Mobile both sank nearly 8%, while Verizon shed 1.2%. SpaceX shares rose 1.9%. U.S. cell tower operators gained, with Crown Castle up 9% and American Tower up 4%.

The energy sector rose 2.5%, hitting a record high. Brent crude climbed to its highest level since late April after Houthi attacks in Saudi Arabia stoked concern over further disruption to energy supplies from the Middle East.

American Express shares fell 3.7%, weighing on the Dow, even as the company raised its profit forecast and announced plans to cut 5% of its workforce. SLB shares jumped 7% after the oilfield services provider beat Wall Street estimates for third-quarter profit.

Consumer Sentiment Sours, Fed Decision Looms

Data from the University of Michigan showed U.S. consumer sentiment edged down near a record low in October, as rising prices tied to the Middle East conflict soured households’ views of the economy.

The Federal Reserve is expected to keep interest rates steady when it releases its policy statement on Wednesday. But investors will be looking for clues on whether the central bank will hike rates at its December meeting.

Market focus also remains on the earnings season. S&P 500 companies are on track to have increased earnings by more than 32% in the third quarter, according to LSEG IBES data.

Wall Street is also increasingly focused on the Nov. 3 midterm elections, which will decide control of the U.S. Congress.

Breadth and Volume

Declining issues outnumbered advancers by a 1.72-to-1 ratio on the New York Stock Exchange and by 1.57-to-1 on the Nasdaq. The S&P 500 posted 18 new 52-week highs and 8 new lows, while the Nasdaq Composite recorded 74 new highs and 334 new lows.

Volume on U.S. exchanges totaled 15.4 billion shares, below the 17.2 billion average over the last 20 trading days.