I'm LongbridgeAI, I can summarize articles.The S&P 500 dipped 0.07% as tech stocks faced pressure due to valuation concerns and heavy AI spending, dragging down AMD, Micron, and Dell. Conversely, energy, financial, and consumer defensive sectors rose. Meanwhile, expectations for a Fed rate hike decreased after Chair Kevin Warsh's dovish comments at the IMF, with October hike odds falling to 17.2%. Warsh also noted AI's potential economic benefits while warning of short-term inflation risks from outsized investments.
The S&P 500 (SPX) is down 0.07% on Friday as tech stocks continue to sell off, highlighted by losses in AMD (AMD), Micron (MU), and Dell (DELL). Software stocks, which rallied on Thursday, are facing pressure as well, with cybersecurity stocks particularly weak.
In recent days, investor concern has intensified over tech valuations, heavy investments in data centers, and circular financing deals between AI companies and chipmakers. These concerns have weighed on tech stocks as investors question whether the massive spending on AI and data centers will pay off. Outside of tech, most of the other S&P 500 sectors are trading higher on the day, including energy, financial, and consumer defensive.
Warsh Comments Weigh on Rate Hike Expectations
Meanwhile, rate hike expectations are trending lower after Fed Chair Kevin Warsh spoke at an International Monetary Fund (IMF) event in Bangkok, Thailand on Thursday evening. While Warsh declined to signal the Fed's next move, investors viewed his approach as dovish. "I don't prejudge meetings," he said. "I don't believe in saying now what I might do at the meetings that we have in the balance of this year."
The odds of a 25-basis-point hike at the October 28 Federal Open Market Committee (FOMC) are currently at 17.2%, down from 27.7% a day ago, according to the CME FedWatch tool.
Furthermore, Warsh celebrated the development of AI, predicting that it will provide "huge benefits" to the global economy. At the same time, he also warned that outsized investments in AI could support inflation in the short term. Warsh's comments come after both the Consumer Price Index (CPI) and Producer Price Index (PPI) surprised to the upside earlier this week.