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STORY: Wall Street’s main indexes closed sharply lower on Friday as shares of chipmakers dropped on concerns of weak demand, and shares of Amazon and other Big Tech companies also came under pressure.

The Dow shed about 8 tenths of a percent, the S&P 500 dropped 1.2% and the Nasdaq plunged 1.5%.

Chip equipment makers Applied Materials, Lam Research and KLA Corp all dropped more than 4% after Reuters reported that fellow chipmaker TSMC asked its major vendors to delay deliveries due to concerns about demand.

Others including Nvidia and Broadcom also fell, pulling down the Philadelphia Semiconductor index.

Treasury yields edged higher ahead of the Federal Reserve policy meeting next week, with the central bank facing a strong U.S. economy and inflation that remains above its 2% target.

Among growth stocks sensitive to higher interest rates, Amazon and Microsoft each lost more than 2%, and Meta Platforms declined 3.7%.

Rod von Lipsey, Managing Director at UBS Private Wealth Management, thinks the pullback in megacap growth stocks will continue – despite them having led the market this year.

“In some respects you’d say that the megacap technology companies have supplanted what we used to think about as blue chip stocks. They now seem to be the source for international stability and security, and that's where the money seems to be flowing. But we think that that trend is about to end. When we look at the valuations and we look at how much has gone into those sectors, we really do think that things like U.S. It is very, very overvalued. And just today UBS’ CIO has basically put that sector in our least-preferred segment.”

In other company news, SoftBank's Arm Holdings fell 4.5% after a stellar Nasdaq debut on Thursday that rekindled expectations of a turnaround in the initial public offering market.

Arm's strong debut prompted grocery delivery app Instacart to raise the proposed price range for its IPO to target a valuation of up to $10 billion.