Nasdaq: Reversal From Highs Deepens as Palantir, Tesla and Chips Lead Tech Drop

S&P 500 Stalls Near Record as Nasdaq Turns Lower; Tech and Casino Stocks Weigh on Gains

The Dow Jones Industrial Average climbed 400 points Friday, with the S&P 500 briefly trading in record territory before trimming gains late in the session. The Nasdaq Composite, which was up earlier, turned negative as key tech names reversed lower, pressuring the broader market heading into the close. The Russell 2000 outperformed with a 1.5% gain on the day.

The initial rally came as traders priced in expectations of a Federal Reserve rate cut, fueled by a lack of fresh economic data due to the ongoing U.S. government shutdown.

However, the Nasdaq slipped 0.65% by the afternoon, led lower by declines in Tesla (-3.97%), Meta Platforms (-1.78%), Nvidia (-1.42%), and Palantir Technologies, which dropped 7.83% on reports of military tech concerns.

Why Did Tech Stocks Drag Down the Nasdaq Index?

The tech-heavy Nasdaq lost momentum as selling picked up in key growth names. Palantir fell sharply following a Reuters report citing “deep flaws” in U.S. Army battlefield systems, including Palantir’s solutions.

Meanwhile, semiconductors were under pressure as Applied Materials declined 2.85% after warning of revenue losses tied to new U.S. export restrictions.

The S&P 500 Information Technology Sector Index slipped 0.33%, with weakness spreading across software, chips, and data analytics names.

Consumer discretionary and communication services sectors also moved into the red, weighed down by Tesla, Amazon, and Alphabet.

Which Sectors and Stocks Are Still Supporting the Rally?

Despite weakness in tech, strength in utilities, health care, and energy helped cushion the S&P 500.

Utilities gained 1.45% and health care rose 1.35%, with support from names like Amgen (+1%) and Biogen (+2.29%).

Energy stocks climbed 1.1%, driven by gains in Diamondback Energy (+2.99%) and Baker Hughes (+0.74%).

However, casino operators took a hit. Las Vegas Sands sank 6.59% and Wynn Resorts fell 4.8% as analysts flagged risk from Tropical Storm Matmo, which threatens Macau operations during China’s Golden Week holiday.

What’s the Market Outlook Into the Close?

As the trading week wraps, the S&P 500 is still on pace for a sixth straight day of gains, though profit-taking in tech is capping the upside. The Nasdaq’s retreat reflects growing sector-specific concerns, especially as traders reduce exposure to high-valuation names.

With economic data limited by the shutdown, the Fed’s next move remains the dominant narrative. Traders will look to upcoming Fed commentary and earnings for further confirmation of policy direction. Short term, range-bound action is likely unless stronger catalysts emerge from Washington or corporate guidance.

More Information in our Economic Calendar.