Wall St ends lower for the day and week as chip selloff broadens

Wall Street extended its decline on Friday, with losses mounting for both the day and the week as a selloff in artificial intelligence-related stocks broadened across the market.

Semiconductor shares, which had recently led the market's upward movement, initiated the pullback. This selloff then expanded as the trading session progressed, impacting all three major U.S. stock indexes, which closed lower. The Philadelphia SE Semiconductor Index recorded its steepest weekly loss in more than a year, tumbling over 18 percent in July alone.

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It's like the market has chip fatigue.

Despite this significant July downturn, the semiconductor index still boasts a year-to-date gain of nearly 65 percent, far outpacing the S&P 500's approximately 9 percent gain over the same period. The SOX index has fallen 20.2 percent from its record closing high on June 22, officially entering a bear market on that date.

Some investors in the AI space are anticipating a slowdown in the nearly trillion-dollar spending boom. Active managers are reportedly scaling back their exposure. "It's like the market has chip fatigue," said Ryan Detrick, chief market strategist at Carson Group. He noted that chip stocks have fallen in three of the last four weeks due to concerns that they "got way ahead of themselves."

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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.