U.S. stocks ended Friday mixed, with the S&P 500 slipping 0.05% to 7,354.02, the Nasdaq declining 0.24% to 25,297.62, and the Dow Jones Industrial Average edging down 0.09% to 51,876.11. The Russell 2000 managed a modest 0.1% gain on the day and finished the week up 1%. Despite the narrow losses, the market's underlying tone was split: advancers on the S&P 500 outnumbered decliners by a 1.8-to-1 ratio, yet the index still closed in the red, reflecting concentrated selling in large-cap technology and AI-exposed names.
Semiconductor Rout Deepens
The PHLX semiconductor index suffered a severe 5.3% drop on Friday, extending its weekly loss to a staggering 7.9%. The selloff was driven by surging memory costs, which are squeezing device makers like Apple Inc. (AAPL). Apple shares bounced 3.1% on Friday, but the relief was short-lived as the company recently raised prices on iPads and MacBooks, citing heavy demand for AI data-center chips and significantly higher memory and storage costs. CEO Tim Cook acknowledged the challenge, saying Apple faces "significantly higher memory costs." Creative Strategies CEO Ben Bajarin described the situation as "structurally tough" for the industry.
Tech Fund Outflows Accelerate
Investors pulled $3.53 billion from U.S. equity funds in the week ended June 24, with technology sector funds hit particularly hard. Tech saw nearly $20 billion in outflows, virtually erasing the prior week's $21.46 billion inflow, according to LSEG Lipper data. The scale of the chip selloff suggests it is not a one-day event but part of a broader rotation out of high-growth names. Meanwhile, after-hours trading showed no clear tech rebound: the SPDR S&P 500 ETF Trust (SPY) edged up 0.30%, while the Invesco QQQ Trust (QQQ) slipped 0.06%. Apple, Microsoft (MSFT), and Amazon (AMZN) traded lower, though Alphabet (GOOGL), Micron (MU), and Nvidia (NVDA) posted slight gains.
Memory Cost Shock Waves
The same memory crunch that benefits suppliers like Micron is now catching up to device makers and inflation-sensitive stocks. Micron said customers locked in $22 billion worth of supply, briefly pushing its market value above Meta Platforms (META) and Tesla (TSLA) on Thursday. By Friday, however, the broader chip index slumped. David Stubbs, chief investment strategist at AlphaCore Wealth Advisory, noted that the "capex story" is "not going away," while Art Hogan, chief market strategist at B. Riley Wealth, said the memory shock is causing "renewed inflationary pressure."
M&A and Sector Moves
ON Semiconductor Corp. (ON) dropped nearly 24% after announcing it would acquire Synaptics Inc. (SYNA) in an all-stock deal valued at $7 billion, targeting "physical AI." Investors punished the deal, adding to the chip sector's woes. In healthcare, Moderna Inc. (MRNA) surged nearly 13%, hitting its highest level since 2024 after its investor day. However, eight of the S&P 500's 11 sectors fell, with industrials and materials leading the declines.
Macro Data and Inflation Concerns
The Bureau of Economic Analysis reported that May PCE prices rose 4.1% year over year, with core PCE up 3.4%, keeping inflation fears alive. The University of Michigan's final June consumer sentiment index came in at 49.5, up from 44.8 in May, but survey director Joanne Hsu said the "cost of living remains at the forefront" for consumers. The data reinforced expectations that the Federal Reserve may need to maintain its hawkish stance.
Jobs Data Key Next Week
With U.S. markets closed Friday for Independence Day, the focus shifts to the June payrolls report due Thursday. Economists polled by Reuters expect a 110,000 job gain, down from May's 172,000. Doug Huber, deputy chief investment officer at Wealth Enhancement, warned that a strong print could hurt stocks by raising the risk of more rate hikes. Julia Hermann, global market strategist at New York Life Investment Management, said higher rates are the "live question" for chip-led trades. The NYSE will observe the July 3 holiday, with late trading from 4 p.m. to 8 p.m. ET. Nike Inc. (NKE) is also set to report earnings next week.
