Financial Markets                      12/12 15:25

   

   NEW YORK (AP) -- More drops for superstar artificial-intelligence stocks 
knocked Wall Street off its record heights on Friday.

   The S&P 500 fell 1.1% from its all-time high for its worst day in three 
weeks. The weakness for tech stocks yanked the Nasdaq composite down by a 
market-leading 1.7%, and the Dow Jones Industrial Average gave back 245 points, 
or 0.5%, after setting its own record the day before.

   Broadcom dragged the market lower and tumbled 11.4% 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 drop added to worries about the AI boom that flared a day before. 
That's when Oracle plunged nearly 11% despite likewise reporting a bigger 
profit for the latest quarter than analysts expected.

   Questions remain about whether all the spending that Oracle is doing on AI 
technology will produce the kind of profits that make it worth the expense, 
along with how the tech giant will pay for it. Such doubts 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 3.3%. 
Oracle fell another 4.5%.

   The stock market also felt some pressure from the bond market, where the 
yield on the 10-year Treasury climbed to 4.18% 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 lifting 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, rose 1% this past week. That's much better than the Nasdaq 
composite's drop of 1.6%.

   Notwithstanding Friday's rise in yields, investors have been 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 companies that depend on spending by U.S. consumers were 
relatively strong Friday, as two out of every five stocks within the S&P 500 
rose. Oil prices eased this week, which could help ease people's bills, and 
hopes are rising that easier interest rates will help support spending.

   Chipotle Mexican Grill rose 3.6%, McDonald's climbed 2.3% and Norwegian 
Cruise Line added 1.5%.

   The biggest gain in the S&P 500 came from Lululemon Athletica, which jumped 
9.6% 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.

   All told, the S&P 500 fell 73.59 points to 6,827.41. The Dow Jones 
Industrial Average dropped 245.96 to 48,458.05, and the Nasdaq composite 
slumped 398.69 to 23,195.17.

   In stock markets abroad, indexes fell modestly 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.

   ___

   AP Writers Teresa Cerojano and Matt Ott contributed.

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