US Stocks Close Lower Amid AI Valuation Concerns and Middle East Tensions

U.S. stock markets concluded Friday's trading session on a down note, with the S&P 500 index retreating 0.17% from its record high. The Dow Jones Industrial Average fell 0.20%, and the Nasdaq Composite saw a 0.28% decrease. Investors remain cautious, partly due to concerns about the high valuations of artificial intelligence-related stocks. The market also weighed mixed economic data and escalating tensions in the Middle East.

In the technology sector, Applied Materials experienced a significant drop of 5.1% despite strong demand for its chip-making equipment driven by AI data center construction. Other chip manufacturers also saw declines, with Broadcom down 5.94% and Intel falling nearly 2%. Nvidia, a key player in the AI space, experienced a slight dip of 0.06%.

The Middle East remained a focal point as attacks on two oil tankers in the Strait of Hormuz disrupted passage, leading the U.S. to signal a potential indefinite maritime blockade against Iran. This heightened geopolitical uncertainty coincided with reports of no progress in war-ending negotiations, further dampening market optimism. Adding to the cautious sentiment, U.S. retail sales unexpectedly decreased by 0.6% in July, marking the largest drop since May 2025, suggesting a cooling of consumer spending after a robust performance earlier in the year.

Despite Friday's downturn, the S&P 500 and Nasdaq managed to eke out modest gains for the week, marking their third consecutive week of slight increases. The Dow Jones Industrial Average, however, ended the week with a decline. The Philadelphia Semiconductor Index also closed lower on Friday, down 0.31%.