U.S. stocks recovered most of their early losses on Friday and traded close to unchanged.
Gains in defensive sectors, including healthcare and consumer staples, helped offset weakness in technology stocks. Improved consumer sentiment data also provided some support to the market.
U.S. Stocks Recover From a Weak Opening
At 10:25 ET, the S&P 500 was up 0.1% at 7,364.71 points.
The technology-heavy Nasdaq Composite traded nearly unchanged at 25,355.51 points. Meanwhile, the Dow Jones Industrial Average gained 0.1% to reach 51,975.09 points.
The mixed performance reflected a rotation away from expensive technology shares and toward more defensive areas of the market.
Healthcare and Consumer Staples Support the Market
Healthcare and consumer staples stocks helped the major indexes recover from their opening declines.
Investors often favour these sectors during periods of uncertainty because demand for essential products and medical services tends to remain relatively stable.
Utilities also attracted interest as traders reduced their exposure to higher-risk growth stocks.
Strait of Hormuz Attack Raises New Concerns
Investors continued to monitor geopolitical developments after another cargo vessel was reportedly attacked near the Strait of Hormuz.
The incident raised fresh doubts about whether the preliminary peace agreement between the United States and Iran would remain intact.
Oil prices gained during the previous session following the attack. However, crude remained close to levels recorded before the conflict began.
OpenAI IPO Delay Pressures Technology Stocks
Technology shares remained under pressure following a report that OpenAI could delay its initial public offering.
The New York Times reported that the artificial intelligence company was considering postponing its stock market debut until 2027. Previous expectations suggested OpenAI could list before the end of 2026.
The possible delay created new uncertainty about investor demand for highly valued AI companies.
AI Valuations Face Greater Scrutiny
Investors have become increasingly concerned about expensive valuations across the artificial intelligence sector.
Many AI companies are spending heavily on data centres, chips and other infrastructure. Some of this investment is funded through debt, while the financial returns remain uncertain.
The possibility of an OpenAI IPO delay encouraged investors to reassess whether current AI valuations can be justified.
Higher borrowing costs have added to these concerns by making large capital-expenditure programmes more expensive.
Asian OpenAI-Linked Stocks Fall
Asian companies with exposure to OpenAI recorded sharp declines on Friday.
SoftBank Group, which has significant exposure to the AI company, fell by approximately 13% in Japanese trading.
Samsung Electronics and SK Hynix also declined by between 4% and 6%. Both companies have partnerships or commercial links with OpenAI.
The losses showed that concerns about the AI sector were spreading beyond the U.S. market.
Technology Sentiment Weakens After SpaceX Debut
The reported OpenAI delay came after strong momentum in the market for major technology listings.
Investor confidence had increased following SpaceX’s widely followed public debut in June.
However, concerns about OpenAI’s listing plans reminded investors that not every major technology company may be ready to enter public markets under current conditions.
Higher Interest Rates Threaten Growth Stocks
Technology valuations also remain vulnerable to expectations of higher interest rates.
Rising rates reduce the present value of companies’ future earnings. They also increase the cost of borrowing money to fund expansion and infrastructure spending.
This is particularly important for chipmakers, software developers and platform companies that require large amounts of capital to support AI growth.
Nasdaq and S&P 500 Head for Weekly Losses
The Nasdaq Composite and S&P 500 were on track to finish the week lower because of continued weakness in technology stocks.
The Dow Jones Industrial Average was heading for a weekly gain as investors moved toward healthcare, utilities and other defensive sectors.
Technology shares recovered some ground on Thursday after Micron Technology triggered a rally among semiconductor companies. However, weakness in several major technology stocks continued to limit the broader market.
Apple Falls as Micron Shares Surge
Apple shares dropped by around 6.1% after the company increased prices for its iPads and MacBooks.
The price increases were intended to offset rising memory-chip costs linked to strong demand from the artificial intelligence industry.
In contrast, Micron Technology shares surged by nearly 16%. The rally helped lift the Philadelphia Semiconductor Index by approximately 3.6%.
The contrasting performances highlighted a growing division within the AI trade. Chipmakers are benefiting from rising infrastructure demand, while consumer electronics and software companies face higher costs.
U.S. Inflation Keeps Rate Concerns Alive
Fresh economic data showed that U.S. inflation had moved above 4% for the first time in three years.
The report strengthened expectations that the Federal Reserve could tighten monetary policy further to control persistent price pressures.
According to the CME FedWatch Tool, traders were pricing in a 64% probability of a 25-basis-point interest-rate increase in September.
Investors Reduce Risk Exposure
Investors are balancing strong company-specific performances against a difficult economic environment.
Micron’s growth in AI data-centre demand demonstrates that some companies continue to benefit from the technology boom. However, high borrowing costs and persistent inflation remain significant risks for the wider market.
Large technology companies are particularly sensitive to higher interest rates and changes in market liquidity. As a result, many investors are reducing their exposure to growth stocks and moving toward more defensive investments.
Overall, U.S. stocks recovered from their opening losses as healthcare and consumer staples offset weakness in technology shares. However, concerns about an OpenAI IPO delay, high AI valuations and further Federal Reserve rate increases continued to limit market gains.
