US stocks fell on Friday, with the Nasdaq Composite leading the slide as semiconductor shares dragged the market lower and Netflix sank 7%. The Dow Jones Industrial Average fell about 0.4%, the S&P 500 lost 0.6%, and the major indexes were still on track for weekly losses by the end of the session.
The drop mattered because investors were already testing a rally that had started from March lows and was built around heavy spending on artificial intelligence. That trade was under strain again on Friday as the PHLX Semiconductor Index entered a bear market, a rough marker that means a decline of at least 20% from a recent high. The sector did begin to recover in afternoon trading as buyers stepped in, but not enough to erase the damage done earlier in the session.
Netflix added another weight. The shares fell after the company’s third quarter revenue forecast disappointed the Street, a miss that landed at a time when the entertainment business is still described as dynamic and competitive. The pullback came even as Chinese AI startup Moonshot unveiled Kimi K3 on Friday, saying the model is the world’s largest open AI model and rivals Anthropic’s frontier Fable model, a reminder that the AI arms race is still shaping sentiment well beyond chip makers themselves.
There was broader context around the move as well. The week’s earnings docket included Truist Financial Corporation and Fifth Third Bancorp, while the University of Michigan’s preliminary consumer sentiment reading showed Americans were starting to feel better about the economy as gas prices eased. Even so, the market’s focus on chips and AI spending kept the pressure on, and Friday’s late recovery in semiconductor shares looked more like a buy-the-dip pause than a real change in direction.
For now, the next question is whether that afternoon rebound can hold once investors come back to the stock market with fresh earnings and economic data, or whether Friday’s slide in semiconductors and streaming names proves the rally from March lows has farther to go before it finds firmer ground.
