Wall Street Falls as Tech Selloff Deepens and Hopes of a December Rate Cut Fade

Wall Street’s major indexes fell on Friday as selling pressure returned to technology stocks and hawkish comments from Federal Reserve officials further dampened expectations of a December interest rate cut.

Concerns over stretched valuations in AI-linked shares have triggered several rounds of selloffs in recent weeks, pushing the Nasdaq into its fifth straight losing session—its longest slide since April. The tech-heavy index was also set for its second consecutive weekly decline.

“People have been talking about overvaluation for a while, but now they’re acting on it,” said Joe Saluzzi, partner and co-founder of Themis Trading. “Momentum is fading. When the market goes down—as it did this morning—traders dump everything. There’s no defensive trade in sight.”

Shares of Applied Materials (AMAT.O) sank 6.3%, the biggest drop on the S&P 500, after the company warned that tighter U.S. export controls could reduce spending by Chinese customers next year.

Most semiconductor stocks fell sharply, pulling the PHLX Semiconductor Index (.SOX) down 3%.

Mega-cap technology names also slipped, with the Roundhill Magnificent Seven ETF down 2%. The S&P 500’s information technology sector (.SPLRCT) dropped 2% as well.

On Thursday, all three major U.S. stock indexes posted their steepest one-day declines in more than a month.

At 9:36 a.m. ET, the Dow Jones Industrial Average fell 568.05 points, or 1.24%, to 46,889.17.
The S&P 500 dropped 73.29 points, or 1.09%, to 6,664.20.
The Nasdaq Composite slid 317.39 points, or 1.44%, to 22,552.96.

Wall Street’s fear gauge, the CBOE Volatility Index (VIX), which hit a one-week high earlier, was up three points at 23.

Meanwhile, a growing number of Fed policymakers signaled a pause on further monetary easing.

• St. Louis Fed President Alberto Musalem urged caution.
• Cleveland Fed chief Beth Hammack said restrictive policy remained necessary to curb inflation.
• Minneapolis Fed President Neel Kashkari told Bloomberg News he opposed an October rate cut.

According to the CME FedWatch Tool, expectations of a 25-basis-point cut in December slid to 53%, down from 67% last week.

Investors were also watching for fresh commentary from Fed officials throughout the day.

The recent U.S. government shutdown, which ended Thursday, caused disruptions in economic data releases, leaving policymakers and traders without critical information on labor-market conditions and inflation. The White House has indicated that gaps in key October data may persist despite the reopening.

On the trade front, Switzerland said U.S. tariffs on Swiss goods would be reduced from 39% to 15%.

In corporate news:

• Walmart (WMT.N) fell 2.2% after announcing that CEO Doug McMillon will retire next year.
• Warner Bros Discovery (WBD.O) gained 2.4% after modifying CEO David Zaslav’s employment agreement during a strategic business review.
• Cidara Therapeutics (CDTX.O) more than doubled after Merck (MRK.N) agreed to acquire the company in a deal valued at roughly $9.2 billion.

Declining stocks outnumbered advancers by 2.86-to-1 on the NYSE and 3.8-to-1 on the Nasdaq.

The S&P 500 recorded seven new 52-week highs and six new lows, while the Nasdaq posted eight new highs and 186 new lows.