S&P 500 and Nasdaq Post Gains for Third Consecutive Week

The S&P 500 index closed lower on Friday, retreating from its all-time high under pressure from Applied Materials shares, as investors assessed retail sales data that came in weaker than expected.

Amid investor concerns over the high valuations of AI-linked stocks, which have surged significantly in recent years, chipmaker shares including Broadcom and Intel also fell on Friday, according to Reuters.

Thomas Martin, chief portfolio manager at Global Investments in Atlanta, said, “Much of the market’s current drivers revolve around different segments of the AI sector. Applied Materials is an example of a company that delivered results exceeding expectations and raised its future guidance.”

Traffic through the Strait of Hormuz came to a near halt after two additional ships were attacked there, and the United States announced it is continuing an indefinite blockade on Iranian ports. These developments heightened pessimism after a senior Iranian source reported on Wednesday that no progress had been made in talks aimed at building on a June agreement to end the war.

Reddit shares surged significantly after the social media company was selected for inclusion in the S&P 500 index, effective August 18.

The U.S. Department of Commerce’s Bureau of Economic Analysis reported on Friday that retail sales unexpectedly declined in July, following a 0.2% rise in June.

The S&P 500 fell 13.41 points, or 0.17%, to 7,785.58 points, while rising 0.28% for the week. The Nasdaq Composite dropped 73.86 points, or 0.28%, to 26,729.16 points, but gained 0.14% for the week. Both indices recorded gains for a third consecutive week.

Although inflation linked to rising oil prices remains a concern, recent economic data has led investors to largely expect the Federal Reserve (the U.S. central bank) to keep interest rates unchanged at its September meeting.

CME Group’s FedWatch tool shows traders pricing in a 67% probability that the Federal Reserve will hold rates steady in September, compared to a 33% chance of a rate hike.