The S&P 500 fell to 7,530 on Friday, leaving the index 4% below its record and at its lowest since September 16. The index previously encountered resistance at 7,830 as concerns about artificial intelligence spread. Investors have sold leading AI companies during the past few weeks, putting pressure on the index despite improving corporate earnings and a declining forward price-to-earnings ratio.
Nvidia, the index's largest company, declined to $201, a 17.2% drop from its year-to-date high. Alphabet declined to $278, putting the shares 31% below their record. Amazon reached a low of $229 after a year-to-date peak of $287. Most S&P 500 members have suffered double-digit declines from their highs this year, including businesses in technology, retail, financial services and consumer industries.
FactSet data show that 60% of S&P 500 companies have released results. FactSet puts blended earnings growth at 30%, exceeding the 29% analysts expected. The index's forward price-to-earnings ratio has fallen to 18.7, below its five-year average of 19.8. The ratio also trails its ten-year average of 19.1. Further earnings releases will be the next major catalyst for the S&P 500 and exchange-traded funds including VOO, SPY and IVV. Companies to watch include Apple, Palantir, AMD, Amgen, Arm Holdings, McDonald's and ConocoPhillips.
AI concerns intensified this week alongside the continuing decline in US stocks. Intel, Amazon and Google shares fell as worries about the AI industry persisted. Amazon and Google declined after maintaining capital-spending commitments and reporting slower core revenue growth. OpenAI has raised only $11 billion against a target of $30 billion. Anthropic's S1 document disclosed losses exceeding $80 billion. Bond yields for companies including Oracle and CoreWeave have continued to rise sharply. The AI Stock Index has climbed to 74. Ray Dalio and Ken Griffin have warned that the bubble could burst soon.
The daily SPX chart shows resistance at 7,813. The index developed a double-top pattern with a neckline of 7,507, the September swing low. The index has fallen below its 50-day moving average, indicating that sellers retain control. Further declines are the most likely outcome, potentially reaching the 38.2% Fibonacci retracement level at 7,261, or 4.2% below the current level.
S&P 500 Index Falls to 7,530 Amid AI Concerns and Earnings Pressure
BenzingaShare
Summary
The fear and greed index dipped below 40 as the S&P 500 fell to 7,530 on Friday, its lowest since mid-September. AI sector worries and earnings pressure dragged down top names like Nvidia and Amazon. Blended earnings grew 30%, with forward P/E at 18.7, below the five-year average. Investors like Ray Dalio have warned of overvaluation. Altcoins to watch may see movement as risk appetite declines.
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