Tumbling tech stocks drag Wall Street to its worst day in 3 weeks

NEW YORK (AP) - More drops for superstars caught up in Wall Street's artificial-intelligence frenzy knocked the U.S. stock market off its record highs. The S&P 500 fell 1.1% Friday from its all-time high and had its worst day in three weeks. The weakness for tech stocks yanked the Nasdaq composite down a market-leading 1.7%, and the Dow Jones Industrial Average fell 0.5% from its own record set the day before. Broadcom dragged the market lower even though the chip company reported a stronger profit for the latest quarter than analysts expected. Treasury yields rose to crank up the pressure on stocks.

THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.

NEW YORK (AP) - More drops for superstars caught up in Wall Street’s artificial-intelligence frenzy are knocking the U.S. stock market off its record highs on Friday.

The S&P 500 fell 1% from its all-time high set the day before and was heading toward its worst day in three weeks. The weakness for tech stocks yanked the Nasdaq composite down by a market-leading 1.5%, as of 3:11 p.m. Eastern time, and the Dow Jones Industrial Average gave back 190 points, or 0.4%, after setting its own record the day before.

Broadcom dragged the market lower and tumbled 12% even though the chip company reported a stronger profit for the latest quarter than analysts expected. Analysts called the performance solid, and CEO Hock Tan said strong 74% growth in AI semiconductor revenue helped lead the way.

But investors may have been concerned with some of Broadcom's financial forecasts, including how much profit it can squeeze out of each $1 of revenue. The AI heavyweight may also have simply run out of momentum after its stock came into the day with a surge of 75.3% for the year so far, more than quadruple the S&P 500's gain.

Broadcom's stumble came a day after Oracle plunged nearly 11% despite likewise reporting a bigger profit for the latest quarter than analysts expected.

Doubts remain about whether all the spending that Oracle is doing on AI technology will end up being worth it, along with how it will pay for it. Such questions are dogging the AI industry broadly, even as many billions of dollars continue to flow in.

Broadcom was the heaviest weight on the S&P 500 Friday, followed by Nvidia. The chip company that’s become the poster child of the AI boom fell 2.5%. Oracle fell another 4.4%.

The stock market also felt some pressure from the bond market, where the yield on the 10-year Treasury climbed to 4.19% from 4.14% late Thursday. Higher yields can discourage investors from paying high prices for stocks and other investments, particularly when critics say they already look too expensive.

Friday’s drops for AI superstars continue a jagged return toward Earth after they earlier had been the main engine propelling Wall Street higher. Other stocks that used to struggle with uncertainty about the U.S. economy's strength and what the Federal Reserve will do with interest rates, meanwhile, have been doing better.

The stocks in the Dow Jones Industrial Average, which has much less of an emphasis on tech, are still up 1.2% for the week so far. That’s much better than the Nasdaq composite’s drop of 1.5%.

Even with Friday’s rise in yields, investors are feeling more optimistic about interest rates. The Fed earlier this week cut its main interest rate for the third time this year and indicated another cut may be ahead in 2026. Wall Street loves lower rates because they can boost the economy and send prices for investments higher, even if they potentially make inflation worse.

The Fed's chair, Jerome Powell, did hint on Wednesday that interest rates may be on hold for a while. But he helped soothe nerves when his comments appeared less harsh than some investors expected in shutting off the possibility of more cuts in 2026.

Stocks of travel-related companies were relatively strong on Friday, and 41% of the stocks within the S&P 500 rose. Oil prices have eased this week, which should help trim their bills, and hopes are rising that easier interest rates will support the economy and encourage more people to take trips.

Southwest Airlines climbed 1.6%, while Norwegian Cruise Line rose 1.6%.

The biggest gain in the S&P 500 came from Lululemon Athletica, which jumped 12.2% after reporting better profit and revenue for the three months through Nov. 2 than analysts expected. It also said its CEO, Calvin McDonald, plans to step down at the end of January following pressure to boost revenue.

In stock markets abroad, indexes fell in Europe following a stronger finish in Asia.

Stocks jumped 1.7% in Hong Kong and rose 1.4% in Tokyo for two of the world's bigger gains.