US stocks sharply retreated from record levels seen during the week. The heavy selling wave on Friday accelerated 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 closing highs 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 lack of an upgraded long-term financial outlook triggered selling. The stock declined 3.4% over the week.
A similar pattern was seen 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 ended the week down over 8%.
The sharpest reaction came from Broadcom. The company’s quarterly revenue missed expectations and its forward guidance failed to satisfy the market. Despite strong AI-related business segments, the stock dropped 13.7% over the week, marking one of the weakest performances.
Intel also joined the list of heavy sellers. The newly acquired stock fell 13.5% for the week. Although the company’s data center processor business is seen as strong in the AI era, selling pressure continued to weigh on the shares.
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. The company’s plan to enter the personal computer market using Arm Holdings architecture caused Arm shares to surge sharply during the day.
Arm declined 3% for the week but maintained strong performance since the start of the year. Marvell Technology stood out as an exception, rising more than 28% in the same week. This rapid climb followed optimistic comments about the company’s market value.
However, the general sell-off in technology shares overshadowed these gains. Investors agreed that expectations have become too elevated even for stocks with strong AI themes.
New IPOs and Share Sales Weigh on the Market
Another key 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 set to sell 555.6 million shares at a fixed price of $135 each, raising about $75 billion. This would value the company at approximately $1.8 trillion.
Anthropic, another AI giant, also came into focus with IPO preparations. The company reportedly made a confidential filing, fueling speculation of a major share sale. 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 AI investments caused unease in the market. The company’s shares came under pressure following the news, with investors expressing concerns that such moves could dilute existing ownership stakes.
Meta Platforms faced 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 sentiment by the weekend was that the new supply could strain demand in the short term.
The week’s outcome combined rising bond yields driven by strong employment data with the vulnerability created by earnings sensitive to expectations. This led to sharp losses in shares and a dent in short-term market confidence.
