US stocks today: Nasdaq, S&P fall over 1%, end lower for week as chip selloff broadens

Wall Street experienced a significant rotation away from growth-oriented technology stocks, with the Nasdaq and S&P 500 both declining over 1% as semiconductor weakness accelerated. The chip sector selloff represents a critical reversal in AI enthusiasm that has dominated 2024, suggesting investor concerns about valuation sustainability and near-term earnings visibility in semiconductor manufacturers.

Netflix's weak forward guidance exemplifies a broader pattern where market-leading companies are unable to maintain bullish consensus expectations, triggering a reassessment of mega-cap growth multiples. The disconnect between strong current earnings and deteriorating guidance underscores growing anxiety about demand normalization and margin pressure across the tech stack.

Energy stocks bucked the broader selloff, gaining on geopolitical risk premium as Middle East tensions supported crude prices. This sectoral divergence—technology weakness coupled with energy strength—reflects a classic risk-off rotation where investors reallocate from speculative growth into defensive commodity plays with price-setting power independent of economic cycles.

Sector implication: The broadening chip selloff and flight from growth suggests a potential revaluation of the entire technology ecosystem. This week's losses may signal the beginning of a sustained rotation toward cyclical and defensive sectors, with energy and staples positioned to outperform if macroeconomic uncertainty persists.