Market Tremors: AI Stocks Slump Amid Inflation and Tariff Concerns

The S&P 500 closed lower on Friday, impacted by declines in AI-focused stocks such as Dell and Nvidia. The industry faced high manufacturing costs and intense competition, leading to investor concerns over inflation data exacerbated by tariffs. Dell's significant drop overshadowed its positive AI demand forecast.

Nvidia experienced a third consecutive trading day downturn following an underwhelming quarterly report. Despite this, AI infrastructure spending remains robust, with investors wary of over-investment and monetization challenges in the tech sector, according to Horizon Investments' Zachary Hill.

Consumer spending in the U.S. rose to a four-month peak in July amid increasing services inflation, failing to deter expectations of the Federal Reserve's interest rate cuts next month. Alibaba's strong cloud performance boosted U.S. shares, while geopolitics and economic signals influenced Wall Street's mixed performance ahead of the Labor Day market closure.

(With inputs from agencies.)