A lower-than-expected US consumer inflation reading, meanwhile, modestly improved the outlook for Federal Reserve interest rate cuts “as investors increasingly envision a trio of rate cuts by year-end,” said a note from Interactive Brokers economist Jose Torres.
“But it’s been a bumpy ride for equities today, as bulls and bears wrestle with the tailwinds of monetary policy accommodation prospects against the backdrop of a crumbling AI narrative,” Torres added.
The broad-based S&P 500 eked out a 0.1% gain following a choppy session.
US equities struggled for momentum a day after major indices lost more than 1%.
Most of the large companies in the so-called “Magnificent Seven” fell Friday, with Apple and Nvidia both shedding more than 2%.
In Europe, Paris dropped 0.4% at the close, with L’Oreal shares falling 4% after the cosmetics giant posted sales below analyst expectations, fuelling fears of weakness for its luxury brands and performance in the key Chinese market.
London’s FTSE 100 ended up 0.4% and the DAX advanced 0.25% in Frankfurt.
Amid growing concerns over the massive investments by AI heavyweights, investors also worry that software, logistics and even real estate companies will see their operations upended by artificial intelligence advances.
“The concerns that have revolved around AI disruption in the software segment have spread,” noted Joshua Mahony, chief market analyst at Scope Markets.
A sense of calm had descended on trading floors early in the week after recent asset-wide volatility, helped by forecast-busting US jobs figures.
However, growing concern about the hundreds of billions spent on AI infrastructure – and the bundles more announced in the past few days – has fanned speculation about when, if ever, companies will see a return.
The release of new tools this month that can perform crucial tasks in a range of fields, including legal, sales and marketing, has meanwhile compounded those jitters – hammering companies worried about competition.
“The AI scare trade has shocked investors in 2026 and has brought a significant amount of market dislocation,” said Kathleen Brooks, research director at XTB.