US equities slide as semiconductor bear market deepens and Netflix slump weighs on sentiment

US equities declined on Friday, putting the major indexes on track for weekly losses as the semiconductor sector continued to drag markets lower. The Dow Jones Industrial Average dropped 1 per cent, the S&P 500 fell roughly 0.8 per cent, and the Nasdaq Composite shed around 1.6 per cent. The downturn followed a downbeat day on Wall Street and coincided with the release of what is described as the world's most powerful open artificial intelligence model.

Chip stocks, as tracked by the PHLX Semiconductor Index, tumbled more than 3 per cent on Friday, officially entering a bear market. This decline followed broader weakness in Asian markets, including a 4 per cent fall in Japan’s Nikkei 225. The tech-driven rally from March lows has now stalled as investors reassess corporate spending on artificial intelligence, clouding near-term optimism for the sector.

Adding to investor jitters regarding AI expenditure, Chinese startup Moonshot unveiled Kimi K3 on Friday. The company describes the model as the world's largest open AI model, positioning it as a rival to Anthropic's frontier Fable model. The release has intensified scrutiny on the sustainability of current AI investment levels among major technology firms.

In the media and entertainment sector, Netflix shares plunged 12 per cent in the first minutes of trading. The sharp decline followed a third-quarter revenue forecast that disappointed analysts, highlighting the challenges the streaming giant faces within a dynamic and competitive entertainment landscape.

Looking ahead, the earnings docket for the week is rounded out by reports from smaller banks, including Truist Financial Corporation and Fifth Third Bancorp. Additionally, the University of Michigan’s consumer sentiment data is scheduled for release, which will provide further insight into how Americans are viewing the economic outlook and rising gas prices.