Chips tipped into a bear market and Iran headline risk kept a bid under crude, pushing the S&P 500 to a third straight down session into the weekend, though buyers stepped in late to limit the damage.
The PHLX Semiconductor Index shed as much as 5.7% Friday, bringing its drawdown from a late-June record high to more than 20%, confirming a bear market, as Chinese AI startup Moonshot unveiled Kimi K3, a powerful open AI model it says rivals Anthropic's frontier Fable model, reviving hyperscaler-capex fears. Chips "closed off its session lows as investors bought the dip." Netflix declined 7% after its third-quarter revenue forecast disappointed, while CENTCOM struck Iran for a seventh consecutive night, coinciding with WTI crude rising 2.77% to $81.14, up 13.44% on the week.
Cash closed with the S&P 500 at 7,457.69, down 76.08 points or 1.01%, Nasdaq Composite off 1.4% to 25,520.24, and the Dow down 406.55 points or 0.77% to 52,146.42. Energy was the only sector gainer, with communication and consumer cyclicals the worst hit; Travelers jumped on an earnings beat, with Progressive and Allstate also gaining. Gold rose 0.57% to $4,010.55 and the 10-year yield climbed to 4.55%, while the VIX popped toward 18.
The risk: Alphabet reports Wednesday and its capex guidance is the key swing factor for the AI trade after the company already raised full-year capex to $180-190B — a beat could spark the mean-reversion bulls are eyeing in oversold chips, a miss extends the unwind. Weekend Iran headlines and crude above $80 are the other tail risk into Monday's open.