S&P 500 ends the week down 1.9% as an AI-chip rout sinks the Nasdaq 4.6%; biotech and defensives lead a rotation
S&P 500 week close: 7,354 (-1.9%) Nasdaq Friday close: 25,298 (-0.2% on the day, -4.6% on the week) Sentiment: mixed
The headline indices fell, but the move was narrow. The Nasdaq lost 4.6% across the five sessions and closed Friday on its fifth straight down day, while the Dow added 0.6% and the Russell 2000 rose 1.0%. That split is the week in one line: investors sold the largest technology and semiconductor names and bought almost everything else.
The week on Wall Street
The selling started with a single report. The New York Times wrote early in the week that OpenAI may push its initial public offering into next year, citing SpaceX's weak trading after its own debut and broader volatility in AI shares. That landed on an already-stretched semiconductor group and set off a global chip selloff. Memory names led the slide, with Micron (MU.US) down more than 10% on its worst session since early June, Marvell (MRVL.US) off 8%, and SanDisk (SNDK.US) lower by 11%. Asian suppliers including Samsung and SK Hynix fell in step, and the Philadelphia Semiconductor Index dropped 7.9% on Tuesday alone.
Underneath the index drop, the rotation was orderly. Consumer staples were the best-performing group on Tuesday as buyers moved away from chips, and that pattern held all week: defensives and rate-sensitive sectors rose while growth names derated. By Friday the indices steadied even as the inflation data ran hot. The S&P 500 finished the day fractionally lower at 7,354, the Nasdaq eased 0.2% to 25,298, and the Dow slipped 0.1% to 51,876. The VIX closed the week at 18.4, up about 12% over the five days as hedging demand rose, though it fell 2.5% on Friday itself.
Sector scorecard (5-day)
- Best: Health Care +7.3%, with biotech (the XBI basket) up 10.4% as the single best corner of the market
- Worst: Technology -5.4%, with semiconductors (the SMH basket) down 7.3% at the center of the selling
- Also higher: Utilities +3.2%, Real Estate +3.2%, Consumer Staples +1.7%
- Dispersion (best sector minus worst): about 12.7 points
The rotation was clean. Every defensive corner finished green while the two growth-heavy groups accounted for the entire decline in the cap-weighted indices.
Top movers: week ending June 26
| Ticker | Week | Reason |
|---|---|---|
| DFTX.US | +83.6% | Phase 3 Emerge trial of depression drug DT120 met all endpoints; RBC raised its target |
| SLS.US | +53.9% | Takeover speculation after amending executive change-of-control terms; heavy short interest squeezed |
| APGE.US | +46.7% | AbbVie (ABBV.US) agreed to acquire Apogee for its inflammation pipeline |
| BB.US | +36.0% | First-quarter beat on QNX automotive and cybersecurity revenue; FY27 guidance raised |
| MANE.US | +35.2% | Pivotal study of oral hair-loss pill VDPHL01 met all endpoints; priced a $384M raise |
| SIVEF.US | -33.0% | Photonics chipmaker swept down in the AI-semiconductor selloff |
| NVTS.US | -28.0% | Chip rout plus dilution worry from a new $500M at-the-market share program |
| MSTR.US | -26.9% | Fell with bitcoin toward $58,000; scrutiny of its leveraged balance sheet added to it |
| ON.US | -25.5% | Announced a $7B all-stock takeover of Synaptics (SYNA.US); TD Cowen cut it to Hold |
| ARM.US | -23.9% | Among the hardest-hit chip designers as AI-spending fears spread |
The two sides mirror each other. The gainers are almost all health-care names lifted by trial data or deal activity, and the losers are almost all semiconductor and AI-linked names caught in the derating.
Friday US session
- S&P 500: 7,354 (-0.1%)
- Nasdaq: 25,298 (-0.2%)
- Dow: 51,876 (-0.1%)
- Russell 2000: 3,010 (+0.1%)
- VIX: 18.4 (-2.5%)
Friday's calm came despite a hot inflation print. The Commerce Department's PCE report for May showed core prices up 3.4% from a year earlier, the highest reading since October 2023, and the headline measure at 4.1%, the highest since April 2023. Stocks held their ground anyway and the VIX fell, a sign that the chip selloff rather than the inflation data was the week's main driver.
Macro themes that played out
Two forces ran through the week. The first was a repricing of AI economics. With semiconductor leaders down double digits, traders questioned how much future growth was already in the price and how quickly AI infrastructure spending would convert into profit. The second was the inflation surprise. Core PCE at a three-year high revived talk of a possible Federal Reserve rate increase, yet the 10-year Treasury yield still eased about eight basis points on the week to 4.37%, a sign that money moved toward safety as equities derated. The US Dollar Index firmed 0.5% to 101.4. The market is rethinking the AI trade and watching inflation at the same time, and defensives and small caps have been the early beneficiaries.
Week ahead: Mon to Fri (ET)
- Mon June 29: no major US data scheduled, a quiet start before a data-heavy stretch
- Tue June 30: JOLTS job openings for May at 10:00am ET
- Wed July 1: ADP private payrolls for June at 8:15am ET and ISM Manufacturing for June at 10:00am ET
- Thu July 2: the June employment report at 8:30am ET, pulled forward a day for the holiday; consensus is about 172,000 jobs added, with weekly jobless claims alongside it
- Fri July 3: US markets closed for the Independence Day holiday
The jobs report on Thursday is the week's main event. A strong number would harden the case the hot PCE print just made, while a soft print would reopen the rate-cut debate. Either way, the bigger question for traders is whether the AI and semiconductor names that led the market lower can stabilize, or whether the rotation into health care and defensives has more room to run.
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