US open: Tech stocks pull indices back from records as bond yields rise

(Sharecast News) - US equity markets fell sharply after the opening bell on Friday as bond yields rose, with Wall Street's three main indices each dropping 1% or more as investors booked profits following record highs reached the previous session.

"There was a distinct 'risk-off' tone across financial markets on Friday morning. The selloff was generalised, although semiconductor stocks were down more than others, with traders looking to capitalise on the sector's outsized gains from the lows hit in late March," said David Morrison, senior market analyst at Trade Nation.

The Dow was down 1.0%, the S&P 500 dropped 1.1% while the Nasdaq sank 1.6%.

Renewed optimism about AI and strong corporate earnings pushed both the S&P 500 and Nasdaq to record highs on Thursday. Chip stocks in particular drove gains on hopes that the meeting in Beijing between Donald Trump and Xi Jinping might result in some major tech deals between the US and China.

However, the lack of any major news prompted semiconductor stocks to slide early on, with Nvidia, Intel, Broadcom and AMD falling sharply on Friday.

Even Applied Materials fell despite reporting record quarterly revenue and issuing a stronger-than-expected outlook overnight, as demand for AI infrastructure and advanced memory chips continued to drive spending on semiconductor manufacturing equipment. The US chip equipment maker said revenue rose 11% year on year to $7.91bn in the second quarter ended 26 April, ahead of analyst expectations of about $7.67bn to $7.69bn cited by Bloomberg.

The wider tech sector was also under pressure, with heavyweights Amazon, Tesla, Meta and Alphabet in the red.

One bright spark was Microsoft, after Pershing Square's Bill Ackman revealed that he has been building a new stake in the company since February on the back its recent investments into AI, which he said weren't yet priced in by the market. In a post on X, he said the position would be disclosed in a regulatory filings later Friday.

Meanwhile, AJ Bell investment director Russ Mould said the lack of developments concerning a possible peace deal between the US and Iran is weighing on investors' minds.

"The situation in the Middle East may have gone relatively quiet but every day that goes by without a resolution to the crisis only cranks up the pressure on the global economy. This is reflected in rising yields on government debt across the globe," he said.

The yield on a 10-year US Treasury note was up 9.4 basis points at 4.583% shortly after the open in New York, hitting levels not seen since May 2025.

One bright spark came from economic data, with the New York Fed reporting that manufacturing activity across the state grew at its highest rate in more than four years in May, with new orders and shipments rising strongly over the month. The headline general business conditions index from the Empire State Manufacturing Survey rose to 19.6 from 11, smashing the 7.5 consensus forecast.

Meanwhile, national industrial production figures from the Fed showed that output grew 0.7% over the month of April after a 0.3% decline in March, ahead of the 0.3% increase expected.