US STOCKS-S&P 500 subdued as gains in banks offset AI jitters; Dow at one-month high

By Tharuniyaa Lakshmi and Purvi Agarwal

Oct 16 (Reuters) - The benchmark S&P 500 was muted on Friday as worries about cracks in the AI trade pressured semiconductor stocks, while gains in banks limited overall declines.

The S&P 500 information technology .SPLRCT was the biggest drag on the index, down 0.9%. Nvidia-backed CoreWeave CRWV.O slipped 7.6% on lingering concerns about the data centre operator's debt load. Its bonds sold off sharply this week, pushing yields to above 15%.

Other neocloud firms Nebius Group NBIS.O and Iren IREN.O dipped over 5.5% each.

Semiconductors lost ground once again, with Micron Technology MU.O down 3.9% and Advanced Micro Devices .AMD off 3.3%. The broader chips index .SOX lost 1.8%, set for the steepest 8-session percentage decline since the "Liberation Day" selloff in April 2025.

Most megacap stocks were also lower, with Alphabet GOOGL.O and Meta META.O down 1% each and weighing on the communication services sector .SPLRCL. These losses pressured the Nasdaq.

A pullback in memory chip stocks earlier this week on rising fears of Chinese competition and concerns over CoreWeave's debt "provided investors with an excuse to cut their exposure to all AI-adjacent companies," said David Morrison, senior market analyst at Trade Nation.

"There's still some caution out there. If it is just a touch of profit-taking after yesterday's rebound, or something more serious... time will tell," said Morrison.

Adding to concerns around AI financing, some current Anthropic investors and prospective investors are weighing a lower valuation for the company in its upcoming IPO, Reuters reported, citing people familiar with the matter.

At 10:24 a.m. ET, the Dow Jones Industrial Average .DJI rose 221.78 points, or 0.43%, to 52,401.89, the S&P 500 .SPX lost 7.30 points, or 0.09%, to 7,736.76 and the Nasdaq Composite .IXIC lost 185.88 points, or 0.70%, to 26,527.14.

On the flip side, most other S&P 500 sectors rose. Materials .SPLRCM was the biggest percentage gainer, rising 1.6%, while financials .SPSY rose 1.1%.

Gains in Goldman Sachs GS.N and JPMorgan Chase JPM.N lifted the Dow to its highest level in over a month.

Tesla TSLA.O gained marginally after unveiling a redesigned Roadster, powered by rocket-style thrusters, developed in collaboration with SpaceX.

The S&P 500 and the Nasdaq were set to post weekly losses as the AI-led rout, mixed bank earnings and inflation data weighed on sentiment through the week. The Dow, meanwhile, was poised for a weekly advance.

Hotter-than-expected consumer and producer inflation reports this week have confirmed that price pressures are extending beyond energy products.

Federal Reserve Chair Kevin Warsh also noted that a spending surge was boosting inflation, but the US economy remained resilient and benefited from an AI-driven investment boom.

Markets increasingly expect the Fed to keep interest rates unchanged this month.

Among others, Varonis Systems VRNS.O climbed 2.8% as Thoma Bravo's Proofpoint agreed to buy the data security firm in a $6.3 billion all-cash deal.

Netflix NFLX.O appointed former Disney executive Peter Rice as chief content officer on Thursday. Its shares were down 2.3%.

Advancing issues outnumbered decliners by a 1.87-to-1 ratio on the NYSE and by a 1.12-to-1 ratio on the Nasdaq.

The S&P 500 posted 15 new 52-week highs and no new lows, while the Nasdaq Composite recorded 40 new highs and 119 new lows.