TLDR
- A report says OpenAI may push its IPO back to 2027, weighing on tech stocks and appetite for AI investments.
- Chip stocks fell as rising memory costs squeeze device makers, following Apple’s MacBook and iPad price hikes.
- The Nasdaq dropped as much as 1% before recovering, while the Dow and S&P 500 turned slightly positive.
- Consumer sentiment rose to 49.5 in June from 44.8, though more than half of Americans say high prices are hurting them.
- Oil fell around 3%, with Brent crude dropping to about $73 a barrel amid ongoing tension in the Strait of Hormuz.
US stocks had a choppy session Friday. The Nasdaq fell as much as 1% before clawing back to near flat. The S&P 500 edged up 0.1%, and the Dow Jones also rose slightly after earlier losses.
The week was rough across the board. Both the Nasdaq and S&P 500 had closed lower for four straight days heading into Friday.
OpenAI IPO May Be Pushed to 2027
A report from the New York Times said OpenAI is considering delaying its much-anticipated IPO until 2027. That news hit tech stocks and dampened investor enthusiasm around artificial intelligence.
The AI trade had already been losing steam. Bets are growing that the Federal Reserve could raise interest rates this year, which tends to hurt growth-oriented tech stocks.
A fresh reading of the Personal Consumption Expenditures index — the Fed’s preferred inflation measure — came in hot for May. That kept the rate hike possibility on the table.
Chip Stocks Under Pressure
Memory chipmaker Micron posted strong earnings, but the results pointed to ongoing cost pressures in the sector. Apple recently raised prices on its MacBooks and iPads, which analysts linked to skyrocketing memory and storage component costs.
That raised concern across the chip sector. Investors worry that higher component costs could weigh on device makers and ripple through the supply chain.
Chip stocks were among the hardest hit on Friday, dragging the Nasdaq lower.
Consumer Sentiment Picks Up Slightly
The University of Michigan’s consumer sentiment index rose to 49.5 in June from 44.8 in May. Year-ahead inflation expectations dipped slightly to 4.6% from 4.8%.
Survey director Joanne Hsu noted that high prices remain top of mind. “For the third straight month, over half of consumers spontaneously mentioned that high prices are weighing down their personal finances,” she said.
The data helped the major indexes recover some ground. The Dow was up 83 points or 0.2% after the release.
Oil Drops on Strait of Hormuz Developments
Oil prices fell around 3% on Friday. Brent crude dropped to about $73 a barrel. West Texas Intermediate traded below $70.
The US and Iran have agreed to a 60-day ceasefire. Tanker traffic continued flowing through the Strait of Hormuz despite a recent attack on a container ship. Iran is reportedly considering charging fees for transit through the waterway.
Treasury yields and the dollar both moved lower after the PCE data, as worries about runaway inflation eased somewhat heading into the weekend.
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