Nasdaq drops 2.5% as AI debt fears hit tech stocks

The Nasdaq Composite fell about 2.5% on Friday, bringing its weekly losses to nearly 5% and putting the tech-heavy index on track for its worst week since June, as investor concerns over higher interest rates and mounting AI-related debt weighed on sentiment. The S&P 500 dropped 1.4%, also posting its worst week since June, with both indexes having hit record highs just 10 days ago. Central to the anxiety is CoreWeave, a Nvidia-backed neocloud with tens of billions of dollars in debt, whose bond yields recently surged to distress levels, signaling a higher default risk. Chipmaker stocks also fell sharply, with a key semiconductor index dropping 3.9% on Friday for an eighth straight day of losses. The selloff was exacerbated by news that Chinese memory chipmaker CXMT made progress on advanced chips, threatening the market dominance of US and South Korean firms. South Korea's Kospi index tumbled 14.5% this week, its worst performance since 2008. The VIX volatility gauge surged 30% on Friday, rising above 20 points, as semis now account for roughly one-fifth of the S&P 500's market value.