Key Highlights

● A 55-session stretch without a sizable one-day S&P 500 drop ended Friday.

● The index slid from Thursday's 7,744.06 to close at 7,659.44.

● It was the longest such stretch in more than six years.

● Friday capped the benchmark's biggest weekly drop since June, with six of 11 sectors higher.

The end of a calm stretch

For 55 straight sessions, the S&P 500 had managed to avoid the kind of daily drop it suffered on Friday. Market data showed that the streak of 55 sessions without a decline of that size was the longest such stretch in more than six years. It ended in Friday's session, when the index slid from Thursday's close of 7,744.06 to finish at 7,659.44.

The timing was notable. The S&P 500 had hit an all-time high just the week before, and its 52-week range tops out at 7,844.52. Friday's decline capped the benchmark's biggest weekly drop since June.

What broke it

The trigger was a shift in how investors view artificial intelligence. Market reports said the market moved from asking what AI can do to how it will be financed, and that the rotation erased more than $1 trillion from semiconductor and AI-related stocks over the week.

The S&P 500 is heavily weighted toward the biggest technology companies, which made it vulnerable. Meta Platforms (NASDAQ:META) fell amid concern over debt-funded AI spending, and Alphabet (NASDAQ:GOOGL) declined on worries about data-center borrowing, according to market reports. Broadcom (NASDAQ:AVGO), Advanced Micro Devices (NASDAQ:AMD), Intel (NASDAQ:INTC) and Micron Technology (NASDAQ:MU) all fell sharply as the chip selloff deepened.

Software added to the pressure late in the day. Palantir Technologies (NASDAQ:PLTR) tumbled into correction territory relative to its Oct 9 record, ServiceNow (NYSE:NOW) slid and Salesforce (NYSE:CRM) fell. Reports indicated that all but seven of the 75 tech stocks in the S&P 500 closed lower.

Outside the index, CoreWeave (NASDAQ:CRWV) served as the lightning rod. The AI cloud provider plunged to $61.39, market data showed, as attention fixed on its debt load of more than $50 billion and a record cost to insure that debt.

A late-day slide

The day did not begin badly. The S&P 500 was slightly higher shortly after the open, and nearly four in five of its members were advancing early on. Selling built through the afternoon, and the steepest losses came in the final hour. The index's low for the day was 7,631.77.

A tale of two markets

The streak's end masked a more mixed picture beneath the surface. Six of 11 sectors finished higher. Energy led as Brent crude rose to $109.86, lifting Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX). Utilities and consumer staples gained, and Visa (NYSE:V) and Mastercard (NYSE:MA) set intraday records.

Market data noted that the equal-weight S&P 500 had its best week relative to technology since 2009, a sign that the average stock held up far better than the giants. A market strategist said earlier: "The good news is that we're starting to see a little bit of improvement in breadth."

Volatility returned as well. The VIX jumped 3.53 points to 19.99, touching 22.31 intraday, its highest since June 11.

Earnings Test the S&P 500 Reset

On the macro side, housing starts land Oct 20 and the Federal Reserve announces its decision Oct 28. Chair Kevin Warsh said in Bangkok: "I don't prejudge meetings."

The next test comes from earnings. One senior market analyst said "upcoming Big Tech earnings will still need to demonstrate that the enormous investment in AI is translating." Netflix (NASDAQ:NFLX) reports on Tuesday, Oct 20, followed by Meta and Tesla (NASDAQ:TSLA) on Wednesday, with Lam Research (NASDAQ:LRCX) and Texas Instruments (NASDAQ:TXN) also due next week.