Nasdaq lags on angst over AI spending ahead of earnings reports
Yahoo Finance ·
STORY: U.S. stocks ended mixed on Friday, with the Dow gaining just under half a percent, the S&P 500 virtually flat and the tech-heavy Nasdaq sliding nearly two-thirds of a percent. The S&P 500 technology index underperformed the broader market as chip stocks fell, with Intel dropping nearly 8% despite forecasting quarterly profit and revenue above Wall Street estimates. Enthusiasm for the AI trade weakened after Alphabet's announcement earlier this week of a plan to hike capital spending even as it burns cash. Richard Reyle, chief investment officer at Questar Capital Partners, said that as a result investors are rotating into what he called "safer parts of the market." "Pharmaceuticals have been flying, and that's been, I think, where we see the rotation of the market right now. [FLASH] You look at the iShares, pharmaceutical fund, it's big components that are J&J and Eli Lilly, they're at all-time highs. And they're still relatively not super expensive stocks. So I think that's a place that can be bought and held. And of course, energy. Exxon's going to announce earnings next week. I bet they're going to be a blockbuster and they're going to continue to be because they make money at $60 a barrel. At $100 a barrel, forget about it. They do very well." The S&P 500 real estate sector also outperformed during the session. Its leading gainer was Digital Realty Trust, which rallied 11% after it raised its full-year forecast for funds from operations. Among other gainers, shares of SLB climbed 11% after the oilfield services firm beat expectations for second-quarter profit. Investors now turn their attention to quarterly results next week from Magnificent 7 megacaps Microsoft, Amazon, Meta and Apple.
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