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Technology shares in the US declined on Friday, appearing poised for their poorest monthly performance in nearly a year, as concerns among investors regarding AI’s economic repercussions coupled with anxieties over US-Iran tensions.
A drop of 1.1 percent in the Nasdaq Composite was observed soon after trading commenced on Friday, bringing its February decline to approximately 3.5 percent. This positioned the technology-focused index to record its most unfavorable week since March 2025, a period when it lost 8 percent amidst US President Donald Trump’s tariff threats starting to destabilize markets. Concurrently, the S&P 500 experienced a 0.8 percent decrease.
This month, equities have been unsettled due to a sequence of alarms regarding AI’s capacity to overhaul whole sectors, such as software development, insurance provision, and asset administration.
According to analysts at Bank of America, the market downturn was “propelled by a pessimistic viewpoint asserting that AI would eradicate the majority of professional roles and ultimately usher the economy into ruin.”
Furthermore, they stated that this perspective “conflicted with established economic principles” but acknowledged that “dense concentration” in the equity market was amplifying the magnitude of the fluctuations.
Moreover, apprehension among investors concerning a potential impending US military action against Iran curbed riskier assets, thus fueling the equity market declines as petroleum prices surged. On Friday, Brent crude, the global oil standard, advanced over 3 percent, reaching $72.90 per barrel.
This week has also seen technology shares affected by ongoing worries regarding the immense corporate expenditure on AI foundational systems, alongside skepticism concerning its future profitability.
The financial results from semiconductor behemoth Nvidia, released earlier in the week, revealed higher than anticipated earnings and stellar profits; however, the announcement did not galvanize generally apprehensive investors. Its share value declined by 2.3 percent on Friday, compounding a 5.5 percent decrease on Thursday.
Rushabh Amin, a portfolio manager at Allspring Global Investments, noted that “capital expenditure magnitude is subject to examination” and that “returns are not being compensated as previously,” as market participants now seek technology firms’ investments to convert into net income prior to receiving recognition.
Sovereign debt instruments in the US saw an uplift as capital allocators flocked towards secure holdings. The return on the 10-year Treasury diminished by 0.04 percentage points, settling at 3.98 percent, thereby dropping below 4 percent for the initial time since November. It is worth noting that yields on bonds decrease when their values appreciate.
Edward Al-Hussainy, a fund manager at Columbia Threadneedle, stated, “In challenging times, when investors require cash flow and protection from exposure, US Treasuries prove to be the top-performing asset.”
The movement on Friday broadened earlier advancements within the Treasury market, positioning government securities for their most favorable month in a year, even with indicators of continuous price increases.
According to Nicolas Trindade, a senior portfolio manager at BNP Paribas Asset Management, the extensive flight to safety, which buoyed Treasuries, was propelled by “concerns over private lending and anxieties about AI-induced job losses across numerous sectors.”
Figures released on Friday indicated a more pronounced increase in producer costs than anticipated, serving as the newest indicator of escalating inflationary forces within the US economy. Following these PPI statistics, market participants in futures trading adjusted their expectations for US interest rate reductions this year, whereby the initial quarter-point decrease is now not projected before September. Prior to these figures, July had been the forecast for traders.