S&P 500 retreats from record Friday, closes down for week as investors rush out of AI trade

Traders work on the floor at the New York Stock Exchange in New York City, U.S., Dec. 12, 2025.

Jeenah Moon | Reuters

The three major averages finished Friday’s session in negative territory.

The S&P 500 dropped 1.07% to close at 6,827.41, while the Nasdaq Composite slid 1.69% to 23,195.17. The Dow Jones Industrial Average moved lower by 245.96 points, or 0.51%, to 48,458.05.

— Sean Conlon

The bull run could continue for another year, according to UBS.

The Wall Street firm forecasts the S&P 500 could rise to 7,700 by the end of 2026, with the Magnificent Seven companies once again proving to be major contributors, read a Friday note from the firm.

“We expect high profitability and the accelerating impact of the AI, power and resources, and longevity themes to drive 2026 performance,” the firm’s Sagar Khandelwal wrote. “Healthy consumer demand, easier monetary policy, and fiscal support reinforce our positive outlook.”

— Sarah Min

Tech stocks rolled over this week, led by declines in Oracle and Broadcom on the back of concerns from both companies’ earnings reports. Investors took in profits from high-flying names linked to the artificial intelligence trade and bought up shares of cyclical, value-oriented names.

Of the ‘Magnificent 7’ group of major tech names, Alphabet and Meta are tracking to be this week’s biggest losers with losses so far of 3.6% and 4.1%, respectively. Chipmaking giant Nvidia has shed around 3% this week, while Amazon is down by about 1.1%.

Broadcom has lost 8.4% this week. Even though the company posted strong fourth-quarter results and current-quarter guidance, investors may be focusing on margin dilution and near-term revenue concerns, according to analysts. Oracle is down 12.6%, continuing the stock’s downward trend.

The Technology Select Sector SPDR Fund is down about 1.8% week to date.

— Pia Singh

Shares of Oracle came off their worst levels of the day after a company spokesperson told CNBC’s Seema Mody that there have been “no delays to any sites required to meet our contractual commitments,” refuting a Bloomberg report from earlier Friday that said the company had delayed some projects for OpenAI to 2028.

“We remain fully aligned with OpenAI and confident in our ability to executive against both our contractual commitments and future expansion plans,” the spokesperson said.

Back in September, CNBC confirmed a Wall Street Journal report that OpenAI had inked a $300 billion five-year deal with Oracle for computing power that starts in 2027.

ORCL, 1-day

The stock was last down more than 4% and was pacing for a more than 12% decline on the week.

— Sean Conlon

Those on Wall Street are taking up shares of small-cap companies in the wake of the Federal Reserve’s latest interest rate cut, according to BTIG.

The Russell 200 small-cap index has been outperforming the three major averages this week, rising almost 2% in the period. It has scored multiple record highs this week.

“Investors are continuing to press the parts of the market most impacted by lower rates, namely small-caps,” said Jonathan Krinsky, the firm’s chief market technician. “As long as rotations persist, a broad based index pullback is going to be difficult to come by, especially with the VIX nearing its lowest close since September.”

— Sean Conlon

Fintech startup Wealthfront opened at $14 per share on the Nasdaq on Friday. This was in line with its initial public offering price.

Wealthfront began trading under the ticker “WLTH.”

Led by CEO David Fortunato, Wealthfront helped popularize the robo-advisor style of automated investing. Its IPO made it the latest among a cohort of fintech firms to go public this year, including Klarna and Chime.

The company’s September IPO filing revealed that as of July 31, it had $88.2 billion in assets on its platform and served 1.3 million customers. It also employed 359 people as of that date.

— Lisa Kailai Han, Hugh Son

Check out the companies making the biggest moves midday:

• Quanex Building Products— The building products maker jumped 9% after the company posted better-than-expected earnings for its fiscal fourth quarter. Quanex earnings and adjusted 83 cents per share on revenue of $789.8 million. Analysts polled by FactSet expected a profit of 52 cents per share on revenue of $470.7 million.
• Allegiant Travel— Shares rose more than 5% following an upgrade to buy from hold at Deutsche Bank. “As the company has jettisoned its loss-making resort, management are now 100% focused on running the airline, and various opportunities are likely to surface in the domestic market as the low fare carrier sector continues to evolve,” the bank said.
• Lantheus— The therapeutics and diagnostics products maker gained more than 6% after a Truist upgrade to buy from hold. “We may be a touch early, but we see LNTH’s 4Q26-2027 growth/profit re-accel. prospects as compelling, and we think investors could begin to position sooner vs. later (i.e. by mid-’26) ahead of a 2H26 rev/profit growth inflection,” Truist analysts said.

Read here for the full list.

— Fred Imbert

The Dow is the only major index tracking for gains this week, underscoring the recent market rotation into blue-chip stocks.

The 30-stock index is on pace to finish the week up more than 1% despite shedding 0.3% in Friday’s midday trading. By comparison, the S&P 500 and Nasdaq Composite are poised to end the week down 0.5% and 1.4%, respectively.

The three major indexes, 5-day chart

Everything is bigger in Texas. That’s also true for data center demand in the Lone Star State, where project developers are rushing to cash in on the artificial intelligence boom.

Cheap land and cheap energy are combining to attract a flood of data center developers to Texas. The potential demand is so vast that it will be impossible to meet by the end of the decade, energy experts say.

Speculative projects are clogging up the pipeline to connect to the electric grid, making it difficult to see how much demand will actually materialize, they say. But investors will be left on the hook if inflated demand forecasts lead to more infrastructure being built than is actually needed.

“It definitely looks, smells, feels — is acting like a bubble,” said Joshua Rhodes, a research scientist at the University of Texas at Austin and a founder of energy consulting firm IdeaSmiths.

“The top line numbers are almost laughable,” Rhodes said. Read more.

— Spencer Kimball

PresidentDonald Trumpis expected to issue an executive order as soon as Monday that would allow for reclassification of weed, a source familiar with the matter told CNBC. Such a move would allow cannabis companies to fall under different tax regulations and encourage investment.

Cannabis stocks took a leg up in Friday’s midday trading following CNBC’s report. Read more.

— Alex Harring, Brandon Gomez

UBS moved off the sidelines on American Airlines, upgrading the stock to buy from neutral, while Allegiant Travel was upgraded to buy from hold at Deutsche Bank.

UBS has a price target of $20 on American Airlines, implying nearly 34% upside from Thursday’s close.

“We believe the market is not fully appreciating AAL’s opportunity to meaningfully expand profits over the next few years as its corporate revenues recover, its loyalty income expands, & it capitalizes on the structural tailwinds to network players,” analyst Atul Maheswari said in a note Thursday.

Meanwhile, Deutsche Bank sees 25% upside ahead for Allegiant with its $105 price target.

“The company has jettisoned its loss-making resort, management are now 100% focused on running the airline, and various opportunities are likely to surface in the domestic market as the low fare carrier sector continues to evolve,” analyst Michael Linenberg said in a note Friday.

Shares of Allegiant popped 6% in midday trading, while American Airlines moved 1% higher.

— Michelle Fox

Margin dilution and concerns over near-term revenue could become key near-term challenges forBroadcom, some Wall Street analysts believe.

Shares shed 10% in morning trading Friday despite the semiconductor manufacturer posting afiscal fourth-quarter earnings and revenue beat. Broadcom also guided for current-quarter revenue to come in at $19.1 billion, representing 28% year-over-year growth and higher than the $18.3 billion analysts polled by LSEG have penciled in.

CEO Hock Tan also said in a statement that Broadcom expects AI chip sales will double this quarter to $8.2 billion from this time last year. However, other comments the CEO made werehurting the stockon Friday morning.

One sore spot on Broadcom’s earnings report was its margins.

“Amid very crowded investor positioning, AVGO put up solid results and guidance but some of the commentary on backlog and margins was muddled enough to potentially drive a ‘sell the news’ dynamic in the near-term,” UBS analyst Timothy Arcuri wrote.

CNBC Pro subscribers can read more here.

— Lisa Kailai Han

Chicago Federal Reserve President Austan Goolsbee on Friday explained why he voted against this week’s interest rate cut, telling CNBC that policymakers should have waited until they had more information before easing further.

“I’m pretty optimistic that for 2026 rates will will be able to be a fair bit lower than they are today,” the central banker said during a “Squawk Box” interview. “But I’ve just been uncomfortable front-loading too many rate cuts and assuming that what we’ve seen in inflation will be transitory.”

Goolsbee was one of three Federal Open Market Committee members to vote against the quarter percentage point reduction, the third consecutive easing measure. He was joined by Kansas City Fed President Jeffrey Schmid, as well as Governor Stephen Miran, who preferred a steeper cut. Read more.

— Jeff Cox

The Dow Jones Industrial Average reached new heights on Friday morning.

The blue-chip index rose 131 points, or about 0.3%, to 48,835.26, a new all-time intraday record.

By contrast, the S&P 500 fell 0.1%, while the Nasdaq Composite dropped 0.3% shortly after the opening bell.

— Sean Conlon

TLRY, 1-day

Check out the companies making headlines before the bell:

• Tilray Brands— The cannabis stock surged 28% after The Washington Post reported that the Trump administration was looking to cut federal restrictions on marijuana. The Amplify Alternative Harvest ETF (MJ) also traded 20% higher.
• Lululemon— The athleisure brand jumped 9.4% after CEO Calvin McDonaldannounced his departure. The retailer also beat Wall Street expectations on both lines.
• RH— The home furnishings firm rose 3% after it reported mixed third-quarter results. The company reported $884 million in revenue, coming in line with an LSEG consensus estimate. However, it softened its fourth-quarter EBITDA margin and revenue forecasts.

Read here for the full list.

— Liz Napolitano

Philadelphia Federal Reserve President Anna Paulson said Friday she views unemployment as a bigger economic threat than inflation, suggesting more room for cutting interest rates.

“That’s partly because I see a decent chance that inflation will come down as we go through next year,” the central banker said for a speech in Delaware.

Paulson, a voter in 2026 on the rate-setting Federal Open Market Committee, added that she views current policy as “somewhat restrictive,” a further nod to room for more easing should there be additional weakness in the labor market.

“This level of rates, together with the cumulative effect of past restrictiveness, should help bring inflation back to 2 percent,” she said.

Paulson added that she’ll be looking at the drivers of economic growth. Should AI-induced productivity gains be the main case, that would give the Fed room to resist raising rates to head off inflation.

— Jeff Cox

Lululemonshares jumped more than 9% in pre-market trade on Friday, after the company announced its CEO Calvin McDonald will step down.

McDonald’s departure, effective Jan. 31, follows more than a year of underperformance at the athleisure company. Read more.

LULU, 1-day

U.S. artificial intelligence names were in negative territory in premarket trading on Friday, extending losses into their third day.

Oraclewas 1% lower in premarket trading, paring earlier losses which saw it fall 1.3%.Nvidiashed 0.1%,Micronfell 1.3%, andCoreWeavewas down 1.9% at 7:23 a.m. ET.

Broadcom, whichreported a strong quarteron Thursday, was last seen down 6%.

The share price of cloud computing and database software makerOracle plummeted on Thursday, ending the session around 11% lighter after revenue earningsmissed analyst expectationson Wednesday. Read more.

— Tasmin Lockwood

Take a look at the stocks moving in evening trading:

• Broadcom — Broadcom shares fell nearly 5% even though the chipmaker exceeded Wall Street’s fourth-quarter expectations and said that artificial intelligence chip sales in the current quarter should double from a year earlier to $8.2 billion. Broadcom expects first-quarter revenue of about $19.1 billion, which would represent 28% year-over-year growth, quelling investors’ fears about the strength in AI demand. Broadcom shares are up 75% year to date, with a 15% gain in the past month alone.
• Lululemon Athletica — Shares of the athletic goods retailer popped about 10% after Lululemon announced that its CEO will leave his post effective Jan. 31 following more than a year of underperformance for the company. Lululemon’s board is working with a “leading executive search firm” to identify a replacement, the company said in a news release. Shares of Lululemon have cratered about 51% year to date.
• Costco — Costco shares dropped less than 1% in extended trading. The big-box retailer, which does not provide a full-year outlook, beat analysts’ quarterly expectations as its sales rose 8.2% year over year.

— Pia Singh