A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 11, 2025. REUTERS/Jeenah Moon

By Johann M Cherian and Pranav Kashyap

Dec 12 (Reuters) - U.S. stocks fell on Friday, sending the S&P 500 and the Nasdaq to more than two-week lows, as Treasury yields rose following hawkish remarks from several policymakers, while Broadcom's latest results sparked concerns about an AI-fueled bubble.

Treasury yields rose after a group of policymakers who voted against the Fed's interest rate cut this week said they are worried that inflation remains too high to warrant lower borrowing costs.

The Labor Department's reports on non-farm payrolls and consumer inflation for November are due next week and may offer greater insight into the economy's health.

Broadcom warned of slimmer future margins, sending its shares down 11%, causing renewed concerns about the profitability of surging AI investments.

"Given the fact that 'Big Tech' has been at the vanguard of the rally since October 2022, there's a danger that it may become the catalyst for broad-based selling," said David Morrison, senior market analyst at Trade Nation.

Other chip stocks, such as Nvidia fell 2.8% and weighed on a broader chips index that lost 4.8%, a day after Oracle unveiled a weak forecast.

Shares of the cloud company fell 5.6% after a report said its data centers for ChatGPT maker OpenAI were delayed to 2028 from 2027.

Other stocks that have rallied this year on the back of AI optimism such as Sandisk tumbled 13.6%, while infrastructure companies such as CoreWeave and Oklo slid 11% each.

At 11:49 a.m. ET, the Dow Jones Industrial Average fell 295.81 points, or 0.61%, to 48,408.20, the S&P 500 lost 88.71 points, or 1.29%, to 6,812.29 and the Nasdaq Composite lost 451.43 points, or 1.91%, to 23,142.43.

Nine of the 11 S&P 500 sectors declined, led by heavyweight tech stocks that lost 2.9%.

Friday's losses erased weekly gains for the S&P 500 and the Nasdaq, while the Dow and the Russell 2000 held gains garnered after the Fed trimmed borrowing costs and delivered a less hawkish outlook than investors had feared on Wednesday.

Still, traders are pricing in a total of 50 basis points of rate cuts by the end of 2026 – more than the Fed signaled on Wednesday.

The biggest gains were in the blue-chip and smallcap indexes, highlighting a shift into other areas of the market, and away from the mega-cap names. The Russell 2000 has outpaced the S&P 500 for much of this quarter along with value-heavy sectors such as healthcare.

However on Friday, higher Treasury yields weighed on the smallcaps Russell 2000 index which fell 1.4%.

Among others, Lululemon Athletica <LULU.O> jumped 10% after the apparel maker raised its annual profit forecast and said that CEO Calvin McDonald was leaving the company.

U.S.-listed shares of cannabis companies rose after a report said President Donald Trump was looking to cut restrictions on marijuana through a planned order. Canopy Growth and Tilray Brands surged 30% each.

Declining issues outnumbered advancers by a 2.16-to-1 ratio on the NYSE and by a 2.11-to-1 ratio on the Nasdaq.

The S&P 500 posted 31 new 52-week highs and three new lows, while the Nasdaq Composite recorded 106 new highs and 69 new lows.

(Reporting by Johann M Cherian and Pranav Kashyap in Bengaluru; Editing by Tasim Zahid)