Wall Street closes lower as AI funding worries and rate expectations weigh
U.S. stocks ended lower on Friday, with the Dow falling 653.35 points, or 1.24%, to 52,214, while the S&P 500, Nasdaq, and Russell 2000 also declined. Equity futures weakened on concerns about funding the AI buildout, and major indexes touched five-week lows early in the session. Investors priced a likely December rate hike at 71%, while a daily sentiment gauge showed extreme fear.
The Dow dropped 653.35 points, or 1.24%, to 52,214, while the S&P 500 lost 39.80 points to 7,623 and the Nasdaq slipped 53.52 points to 25,955. The Russell 2000 also fell, down 8.15 points to 2,775. Futures weakened after prior declines tied to worries about financing AI expansion, and major benchmarks touched five-week lows early.
Traders assigned a 71% chance to a December rate increase, with implied rates near 4.098% for December 2026 and 4.514% for December 2027. One sentiment measure sat at 20/100, a level labeled extreme fear. For the week, the S&P 500 lost 0.47%, the Nasdaq fell 0.71%, and the Dow gained 0.41%.
Falling share prices could trim household wealth and make investors, including retirees with pensions or brokerage accounts, more cautious. Expectations of a December rate increase may keep borrowing costs elevated for mortgages, credit cards, and business loans, potentially weighing on spending and hiring. Uncertainty over AI funding could affect technology firms, startups, and workers tied to that sector, while market swings may influence consumer confidence and near-term investment decisions.