Tech Stocks Lead Global Market Decline; Dell Plunges on AI Server Costs
Major stock indexes declined on Friday, with technology shares leading the fall. The Nasdaq Composite dropped over 1%, while the S&P 500 technology index fell 1.6%. Dell Technologies plunged 8.9% due to high manufacturing costs for AI-optimized servers, affecting other AI-related stocks like Nvidia and Broadcom. Despite the day's losses, major indexes posted gains for the month. The PCE Price Index rose 0.2% in July, aligning with estimates and reinforcing expectations for potential Fed rate cuts. The dollar weakened against the euro, and gold prices increased.
*this image is generated using AI for illustrative purposes only.
Major stock indexes experienced a downturn on Friday, with technology shares leading the decline. The tech-heavy Nasdaq Composite fell over 1%, while the S&P 500 technology index dropped 1.6%.
Dell's Plunge Impacts AI-Related Stocks
Dell Technologies saw a significant drop of 8.9% after reporting high manufacturing costs for AI-optimized servers. This news had a ripple effect on other AI-related stocks, with industry giants Nvidia and Broadcom declining 3.3% and 3.6%, respectively.
Market Performance
The broader market also felt the impact:
| Index | Change | Closing Value |
|---|---|---|
| Dow Jones Industrial Average | -0.20% | 45,544.88 |
| S&P 500 | -0.64% | 6,460.26 |
| Nasdaq Composite | -1.15% | 21,455.55 |
Despite the day's losses, major indexes posted gains for the month:
| Index | Monthly Gain |
|---|---|
| S&P 500 | 1.9% |
| Dow Jones | 3.2% |
| Nasdaq | 1.6% |
Economic Data and Fed Rate Cut Expectations
The U.S. Personal Consumption Expenditures (PCE) Price Index, a key inflation indicator, rose 0.2% in July, aligning with economist estimates. The core PCE, which excludes volatile food and energy prices, increased 0.3% for the month.
This data reinforced expectations for potential Federal Reserve rate cuts. Traders are now pricing in 89% odds of a September cut, up from 84% previously.
Currency and Commodities
The dollar weakened against the euro, with the European currency rising 0.11% to $1.1696.
In the commodities market:
| Commodity | Price | Change |
|---|---|---|
| U.S. crude | 64.01 | |
| Brent crude | 68.12 | |
| Gold | 3,446.75 | 0.88% |
Global Market Impact
The market decline wasn't limited to the U.S., as European shares also closed lower on Friday.
As global markets navigate through economic data, tech sector challenges, and monetary policy expectations, investors remain cautious. The impact of AI-related costs on tech giants like Dell serves as a reminder of the ongoing adjustments in the rapidly evolving technology landscape.
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