Nasdaq Posts Worst Week Since April 2025 as AI Selloff and Oil Shock Rattle Wall Street

U.S. stocks tumbled Friday to cap a brutal week, with an AI-sector selloff compounded by an oil price surge pushing the Nasdaq to its worst weekly performance since April 2025. The Nasdaq fell 2.13% on the day to close at 26,144.45, dropping 5.5% for the week and sitting 7% below its high from just 10 days prior. The S&P 500 lost 1.06% to close at 7,662.33, while the Dow Jones Industrial Average slipped 0.40% to 51,969.63. The VIX spiked 24% to 20.41, signaling a sharp rise in investor anxiety.

The AI trade bore the heaviest damage. Neocloud names CoreWeave and Nebius cratered 11.91% and 12.18% respectively as debt concerns spread through the sector. High-multiple AI software names also got dumped, with Palantir falling 7.22%, Snowflake sinking 8.47%, and Super Micro Computer cratering 9.86%. Chipmakers suffered broadly, with AMD down 5.95%, Arm off 6.97%, Intel losing 5.79%, Micron falling 5.63%, and Seagate dropping 7.50%. The Philadelphia Semiconductor Index fell 3.83%. Among mega-caps, Meta dropped 3.72%, Alphabet slid 2.47%, and Microsoft lost 1.93%.

Oil added to the pressure after Iran sank a container ship in the Strait of Hormuz, sending Brent crude surging 3.44% to $109.56 per barrel. The 10-year Treasury yield held at 5.10%. Energy stocks gained 2.52% on the day, and defensive names including JPMorgan, Wells Fargo, and Berkshire Hathaway each rose more than 1%, while bank stocks overall extended their losing streak to six consecutive weeks, the longest such run since the 2008 financial crisis.

Fed Chair Kevin Warsh gave no rate signal during remarks in Bangkok, cutting market-implied odds of an October rate hike to 15% from 28%. MicroStrategy plunged 9.56% after MSCI adopted new rules that could exclude it from its indexes in November. On the positive side, Apple edged up 0.43% to $343.46 after iPhone Duo preorders sold out quickly, and Varonis surged 2.92% after Thoma Bravo's Proofpoint agreed to acquire it for $6.3 billion at $49.75 per share. Skydance was on track to be the week's worst-performing S&P 500 stock, with Bernstein SocGen halving its price target on cash flow uncertainty.