[Closing Bell] Nasdaq Plunges 2.15% as AI Debt Concerns and Soaring Oil Prices Take a Toll

Coreweave plummets by about 12%... Selling spreads across semiconductor stocks, S&P 500 and Nasdaq, biggest weekly drop since June... Energy stocks are strong

The New York stock market fell on the 16th (local time), led by technology stocks. Selling pressure increased as doubts continued about whether large-scale investments by artificial intelligence (AI)-related companies could lead to profits. Rising international oil prices also increased the price burden and put pressure on investment sentiment.

On this day, the Dow Jones Industrial Average ended trading at 52,002.41, down 175.28 points (0.34%) from the previous day. The Standard & Poor's (S&P) 500 index fell 84.62 points (1.09%) to 7,659.44, and the Nasdaq Composite Index fell 573 points (2.15%) to 26,140.03.

The weakness of AI-related stocks coincided with concerns about financial capacity to support investment expansion. How quickly the enormous funds invested in data centers and semiconductors will lead to actual profits has emerged as a topic of interest in the market. Companies with a high dependence on borrowing may face increased interest burden as high interest rates continue, leading to continued vigilance regarding profitability and financing conditions.

AI infrastructure company Coreweave plummeted by about 12%, with a cumulative drop of about 25% over the past five trading days. This week, corporate bond prices also fell significantly, with yields on some bonds exceeding 15%. The Philadelphia Semiconductor Index fell about 3.8%, falling for 8 consecutive trading days.

The weakness of semiconductor stocks was also noticeable. AMD fell about 6%, Intel fell 5.8%, Micron fell 5.6%, and Broadcom fell 4.5%. On the other hand, ExxonMobil and Chevron rose about 2.5% and 2.6%, respectively, showing a different trend from technology stocks.

International oil prices soared due to the situation in the Middle East and supply instability surrounding Russian energy facilities. West Texas Intermediate (WTI) front-month contracts closed at $101.41 per barrel, up about 3.5% from the previous day, and Brent crude oil front-month contracts closed at $109.86, up about 3.7%. Rising oil prices are a factor that increases the profit expectations of oil producing companies, while increasing the cost and price burden on the overall economy.

Uncertainty surrounding monetary policy also remains. Kevin Warsh, chairman of the U.S. Federal Reserve, positively evaluated the resilience of the U.S. economy in Bangkok, Thailand on this day, but did not provide specific directions for future interest rate decisions. He expressed the view that expansion of investment, including AI, can increase productivity in the long term, but in the short term, it can increase demand and put upward pressure on prices.

The U.S. 10-year maturity Treasury bond interest rate was around 5.09% on this day, showing no significant difference from the previous day. Even in a situation where movement in government bond interest rates was limited, the selling of technology stocks continued.

On a weekly basis, the Nasdaq fell 4.48% and the S&P 500 fell 1.95%, with both indices having their worst week since June. The Dow rose 0.67%. As the decline was concentrated in indices with a high proportion of technology stocks, differentiation by industry became clearer.