Live: War and AI worries drag down Wall Street, ASX set to rise

Wall Street stocks continued their downward trend on Friday, with investors grappling with anxieties surrounding global conflicts and the valuations of artificial intelligence companies. The S&P 500 index fell 1.0%, the Dow Jones Industrial Average dropped 0.8%, and the Nasdaq Composite saw a more significant decline of 1.5%.

The technology sector, especially stocks linked to AI, has been a focal point of concern. The Philadelphia SE Semiconductor Index, a broad measure of chip and data memory stock valuations, experienced its steepest weekly loss in over a year, tumbling more than 18% in July alone. This downturn technically places the sector in a "bear market," although it remains up nearly 65% year-to-date.

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It's like the market has chip fatigue. Chip stocks are down three of the last four weeks, and it's the same worries, the same concerns; those stocks got way ahead of themselves, and now they're coming back to Earth.

Market strategists observe a growing "chip fatigue" among investors, with AI stocks having experienced substantial gains over the past year. "Those stocks got way ahead of themselves, and now they're coming back to Earth," noted Ryan Detrick, chief market strategist at Carson Group. Many investors are repositioning their portfolios, anticipating a slowdown in the nearly trillion-dollar AI spending boom.

However, the broader market picture shows resilience outside the tech sector. The second-quarter earnings season is unfolding positively for many S&P 500 companies. Of the 49 companies that have reported so far, 90% have delivered results better than anticipated, according to LSEG. Analysts now project year-on-year S&P 500 earnings growth of 26%, a notable increase from earlier expectations. Banks, in particular, have started the earnings season on a strong note.

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It's early in earnings season, but we're off to a tremendous start. Over the next several weeks, we're going to get a lot more sectors and industries reporting. But so far, the banks have really started us off on the right foot.