Nasdaq's AI-Driven Rally Faces Weekly Drop Amid Geopolitical Concerns

The Nasdaq suffered its largest weekly drop since April amid concerns over the sustainability of AI stocks' rally, exacerbated by Nvidia's CEO's remarks on China's AI race. With tech shares down and economic uncertainties looming, markets experienced mixed performances, while Treasury yields and the dollar remained volatile.

The Nasdaq ended slightly lower on Friday, closing a week marked by its steepest percentage drop since early April as concerns over artificial intelligence stocks' sustainability intensified. Meanwhile, U.S. Treasury yields fell slightly with chip and tech stocks registering significant declines, contributing to the Nasdaq's 3% weekly decrease.

This downturn followed statements from Nvidia CEO Jensen Huang warning that China might surpass the U.S. in the AI race, leading to a reevaluation among investors. These comments fueled continued AI stock selloffs and underlined the broader tech sector's weakness, said Michael O'Rourke of JonesTrading.

Despite these difficulties, the Dow and S&P 500 saw gains Friday, contrasting with flagging Asian markets driven by weak Chinese trade data. Yield adjustments and mixed currency markets followed new insights into consumer sentiment amid an ongoing U.S. government shutdown.

(With inputs from agencies.)