United States benchmark averages closed lower on Friday (Saturday AEST) as investors digested weaker-than-expected economic data, concerns over elevated AI-related valuations and renewed tensions in the Middle East.
The Dow Jones Industrial Average fell 107.6 points, or 0.2%, to 53,732.4. The S&P 500 declined 13.2 points, or 0.2%, to 7,785.6, while the Nasdaq Composite dropped 73.9 points, or 0.3%, to 26,729.2.
For the week, the Dow slipped 0.6%, while the S&P 500 gained 0.4% and the Nasdaq added 0.1%.
Chipmakers came under pressure as investors remained cautious about lofty valuations across AI-related stocks. Broadcom fell 5.9%, while Intel declined 2%.
Concerns over the Middle East also weighed on sentiment. Transit through the Strait of Hormuz appeared to be close to a standstill after two more vessels were attacked, while the United States said it could maintain a naval blockade of Iran indefinitely.
The developments added to concerns after a senior Iranian source told Reuters that there had been no progress in talks aimed at building on a June agreement to end the war.
Reddit surged 12.9% after the social media company was announced as a new addition to the S&P 500, effective August 18.
Applied Materials dropped 5.1% despite issuing an upbeat quarterly forecast, as investors appeared unimpressed by its outlook.
Drone manufacturers gained after President Donald Trump said late Thursday that tariffs would be imposed on imports of drones and their components. Red Cat Holdings rallied 8.8%, while Unusual Machines soared 25%.
On the economic front, July retail sales came in weaker than expected, falling 0.6% following an unrevised 0.2% increase in June, according to the Commerce Department's Census Bureau.
Markets were expecting a slight increase of 0.1%.
Despite concerns that elevated oil prices could add to inflationary pressures, recent economic data has led investors to largely expect the Federal Reserve to leave interest rates unchanged at its September meeting.
Separately, the University of Michigan's preliminary consumer sentiment index fell to 51 in August, below expectations of 54.5.
According to the CME Group FedWatch Tool, traders were pricing in a 66.9% probability of rates remaining unchanged in September, compared with a 33.1% chance of a hike.
On the bond markets, 10-year and two-year Treasury yields rose 0.9% and 0.5%, respectively, to 4.692% and 4.171%.
