US STOCKS-Wall St dips after AI-led selloff; SpaceX worries hit telecoms
US STOCKS-Wall St dips after AI-led selloff; SpaceX worries hit telecoms Updates for market open
By Tharuniyaa Lakshmi and Ragini Mathur
Oct 23 (Reuters) - The S&P 500 and the Nasdaq touched their lowest in five weeks on Friday as caution prevailed after a sharp selloff in AI-linked stocks, while telecom stocks tumbled on fears that intensified competition from SpaceX could erode their market share.
For the week, the benchmark S&P 500 and the Nasdaq were on track for losses, while the blue-chip Dow remained higher, supported by gains in defensive sectors as investors sought refuge from volatility in technology stocks.
The S&P 500 communication services index .SPLRCL was down 1%, as AT&T T.N, Verizon VZ.N and T-Mobile TMUS.O fell between 3% and 4.7% after a report said SpaceX SPCX.O was in talks with cellular infrastructure companies about launching a nationwide wireless carrier program.
US cell tower operators, however, gained from this news, with Crown Castle CCI.N up 12.6% and American Tower AMT.N up 6.9%.
SpaceX shares gained 1.2%.
AI-related shares swung sharply this month, first coming under pressure over CoreWeave's CRWV.O debt burden and the cost of financing AI investment, then rallying on Wednesday after upbeat results from SpaceX SPCX.O and Super Micro SMCI.O.
The gains reversed on Thursday and the tech-heavy Nasdaq .IXIC fell nearly 3%. The slide accelerated following Meta's META.O nearly 8% decline after the Facebook parent reported its first cash outflow in more than a decade amid concerns over its AI-related expenditures.
On Friday, CoreWeave shares added 0.3%, and 'Magnificent 7' stocks were little changed, with Meta falling 1.3%.
"This is the short term where the selloff is extreme, and I don't think there are fundamental reasons for it," said Kim Forrest, chief investment officer at Bokeh Capital Partners.
"We're at the beginning of a long cycle of AI and people thought it was going to be much shorter."
Market focus remains on the earnings season, with major companies such as Microsoft MSFT.O, Alphabet GOOGL.O and Amazon AMZN.O reporting next week.
At 09:53 a.m. ET, the Dow Jones Industrial Average .DJI fell 535.54 points, or 1.01%, to 52,332.44, the S&P 500 .SPX lost 29.14 points, or 0.38%, to 7,634.09 and the Nasdaq Composite .IXIC lost 23.61 points, or 0.08%, to 25,986.76.
Nine of 11 sectors on the S&P 500 declined. The energy index .SPNY rose to a record high, tracking gains in oil prices, while the real estate index .SPLRCR advanced 0.8%.
Brent crude held near a more-than-five-month high amid Middle East supply concerns, adding to inflation worries ahead of the Federal Reserve's policy meeting next week. O/R
Markets expect the Fed to keep interest rates unchanged at its meeting next week, according to the CME's FedWatch Tool.
S&P 500's third-quarter profit growth is now forecast at 32.3%, up from 30.7% previously, according to LSEG data.
Among major movers, Comfort Systems FIX.N was the biggest loser on the benchmark index, with a 10.1% fall, despite its third-quarter revenue and profit beating estimates.
Bloom Energy BE.N dropped 11.3% even after the energy firm raised its fiscal 2026 forecast.
Western Digital WDC.O fell 1.8%, despite the data storage products company posting a strong second-quarter revenue forecast.
SLB SLB.N rose 2.4% after the oilfield services provider beat Wall Street estimates for third-quarter profit.
Declining issues outnumbered advancers by a 2.4-to-1 ratio on the NYSE and by a 2.03-to-1 ratio on the Nasdaq.
The S&P 500 posted 16 new 52-week highs and 6 new lows, while the Nasdaq Composite recorded 29 new highs and 190 new lows.
(Reporting by Tharuniyaa Lakshmi and Ragini Mathur in Bengaluru; Editing by Shinjini Ganguli)