Stocks extend slide amid investor concerns about AI and interest rates

Wall Street wobbled on Friday, with stocks sinking for a second straight day as investors fret over the health of the technology sector and the prospects of a December interest rate cut by the Federal Reserve.

The S&P 500 fell 32 points, or 0.5%, in early trading, while the Dow Jones Industrial Average dropped 467 points, or 1%. The tech-heavy Nasdaq Composite slid 0.%. The weak start comes after the stock market on Thursday had one of its worst days since April.

Global financial markets also skidded. In European trading, Britain’s FTSE 100 fell more than 1.1%, Germany’s DAX shed 0.7% and France’s CAC 40 slipped 0.4%.

In a note to investors, analyst Adam Crisafulli of Vital Knowledge said on Friday that investor concerns about the strength of AI company stocks have flared this week, while noting that growth in the sector remains solid.

“There’s a lot of emotion involved with AI, and people are getting spooked by the sloppy price action in prominent AI-linked stocks, but actual fundamentals in the industry remain very strong,” he said.

Stocks have also cooled because investors are less confident about another Federal Reserve interest rate cut when the central bank meets for the final time this year on Dec. 9-10.

The Fed lowered rates in September and October, but some policymakers have signaled their hesitation about cutting rates in December. Fed Chair Jerome Powell said last month that another cut isn’t “a foregone conclusion.”

Investors put the likelihood of a Fed rate cut in December at 53%, according to CME FedWatch.

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