By Ragini Mathur and Avinash P
July 24 (Reuters) – The S&P 500 and Nasdaq fell on Friday and headed for weekly losses, as worries over AI spending overshadowed fresh corporate earnings, while investors also weighed new tariffs and mounting risks from the Middle East war.
The S&P 500 and the Nasdaq were on track for a second straight weekly loss, while the Dow was set for a third consecutive week of declines.
Intel added to this week’s key earnings reports, forecasting quarterly profit and revenue above Wall Street estimates and outlining plans to increase spending over the next two years. The chipmaker’s shares fell 3.8% despite upbeat results.
The broader semiconductor gauge, the Philadelphia SE Semiconductor index, shed 3.1%.
Results from Alphabet and Tesla on Thursday deepened concerns over AI spending, highlighting rising capital spending and cash burn among major technology companies, setting a cautious tone ahead of next week’s earnings from Microsoft, Amazon and Meta .
“With AI remaining the dominant investment theme, markets are becoming increasingly selective, rewarding strong execution while showing less tolerance for elevated spending without a clear path to returns,” said Daniela Hathorn, senior market analyst at Capital.com.
The real estate sector rose 2.3% and led the gains on the benchmark index. However, losses in the heavyweight information technology capped the advances.
Meanwhile, the Trump administration imposed new tariffs of 10% and 12.5% on goods from 60 trading partners, citing lax enforcement of forced-labor bans. The move came as a temporary 10% global tariff expired.
Geopolitical risks were in focus after U.S. missiles struck targets across Iran on Friday following President Donald Trump’s warning of “major military punishment” for Tehran and its Houthi allies in Yemen.
Oil prices surged above $100 a barrel on Thursday as investors reassessed the risk of a prolonged disruption to energy supplies.
Despite prices easing on Friday, a sustained energy shock could rekindle global inflation concerns and prompt central banks to recalibrate monetary policy.
The Federal Reserve is due to meet next week, with markets pricing in a roughly one-in-three chance of a rate hike, up from 12% a week earlier, according to CME’s FedWatch tool.
Investors will also watch next week’s PCE data, the Fed’s preferred inflation gauge, due a day after the policy decision.
At 09:57 a.m. the Dow Jones Industrial Average rose 93.49 points, or 0.18%, to 51,805.14, the S&P 500 lost 6.65 points, or 0.09%, to 7,401.65 and the Nasdaq Composite lost 155.55 points, or 0.62%, to 24,982.14.
Data showed that activity in the U.S. services sector accelerated in July, aided in part by spending around the FIFA World Cup and the Independence Day holiday, while the pace of growth in the manufacturing sector eased to the slowest since March.
Among others, Verizon added 2.8% as the network provider raised its annual forecast for adjusted profit and free cash flow.
Advancing issues outnumbered decliners by a 1.75-to-1 ratio on the NYSE, while declining issues outnumbered advancers by a 1.1-to-1 ratio on the Nasdaq.
The S&P 500 posted five new 52-week highs and three new lows, while the Nasdaq Composite recorded 30 new highs and 79 new lows.
(Reporting by Ragini Mathur and Avinash P in Bengaluru; Editing by Maju Samuel)
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