Wall Street closed lower Thursday, pressured by a sell-off in private equity stocks following Blue Owl Capital’s decision to restrict withdrawals from a debt fund and ongoing concerns about the sustainability of gains in artificial intelligence-linked technology companies. The S&P 500 declined 0.28% to complete the session at 6,861.89 points, although the Nasdaq Composite fell 0.31% to 22,682.
Blue Owl’s move to sell $1.4 billion in assets and freeze redemptions at one of its funds triggered a broader decline in the private equity sector. Apollo Global Management, Ares, KKR & Co., and Carlyle Group all experienced losses ranging from 1.9% to 5.2%, according to reports. Blue Owl itself tumbled 6%, reflecting growing anxieties about credit quality and lenders’ exposure to software stocks, particularly within the rapidly expanding private credit market.
The restrictions imposed by Blue Owl, which markets debt funds to retail investors, have raised questions about liquidity risks in similar investment vehicles. Economist Mohamed El-Erian suggested the move could be a “canary-in-the-coalmine” moment, though he cautioned that systemic risks are not currently at the level seen during the 2008 financial crisis. He noted, however, that a “significant – and necessary – valuation hit is looming for specific assets.”
Technology stocks also contributed to the market’s downturn. Apple dipped 1.4%, weighing more heavily on the S&P 500 than any other stock. Investors are increasingly questioning whether substantial investments in AI will translate into sustained revenue and profit growth. Nvidia also eased ahead of its earnings report next week.
Earnings reactions were mixed. Deere & Co. Jumped 11.6% after raising its annual profit forecast and exceeding first-quarter results estimates. Conversely, EPAM Systems slumped 17% on cautious guidance, and Carvana dropped nearly 8% after missing estimates. Omnicom Group climbed 15% on a revenue beat.
Geopolitical tensions added to market pressures, driving Brent crude oil toward $72 a barrel – its highest level in six months. Concerns about potential disruption in the Strait of Hormuz, which handles roughly 20% of global oil supply, were heightened after President Trump gave Iran 10 to 15 days to reach a nuclear deal. This pushed the price of oil toward its first weekly gain in three weeks.
The US dollar also strengthened, hovering near a one-month high and gaining more than 1% for the week. This was supported by robust US economic data, hawkish signals from the Federal Reserve, and safe-haven demand amid geopolitical risks. Weekly jobless claims fell more than expected, indicating continued resilience in the labor market.
Investors are now focused on the core personal consumption expenditures (PCE) report, seeking further clarity on the timing of potential interest rate cuts by the Federal Reserve. Markets are currently pricing in a roughly 50-60% chance of a Fed move by June.
From a technical perspective, the S&P 500 remains under pressure while it stays below Thursday’s high of 6909. A fall through Thursday’s low of 6833 could engage support levels between 6789 and 6760. Failure to hold those levels could lead to a test of the mid-December low at 6720.
