Wall Street tech sell-off deepens as Intel slump drags U.S. indexes

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Wall Street tech sell-off deepens

Highlights

S&P 500 falls 1.8% for its worst day since June, with the Nasdaq dropping 2.9% as AI-driven tech valuations face scrutiny over earnings shortfalls.
Intel plunges 28.6% for its worst one-day decline since 1974 after forecasting weaker profit, while Nvidia falls 4.2% and Amazon loses 1.4% amid concerns over heavy AI investment and cash burn.
Binance suffers a hack linked to over $U.S.6 billion in crypto, sending Bitcoin below $U.S.77,000 and dragging Coinbase Global down 10.6% despite better-than-expected earnings.

Tech earnings and AI spending drive losses

As reported by ABC News, Friday's market decline intensifies as investors question whether the surge in valuations tied to artificial intelligence has run too far ahead of earnings and cash generation.

The S&P 500 tumbles 1.8 per cent for its worst day since June and caps a third straight losing week. The Nasdaq composite falls 2.9 per cent, the steepest drop among the major indexes, while the Dow Jones Industrial Average loses 572 points, or 1.1 per cent.

Intel leads the retreat, plunging 28.6 per cent for its worst one-day drop since 1974. The chipmaker's forecast for profit in the final three months of this year misses analysts' expectations, even after it reports quarterly profit above forecasts, with CEO Lip-Bu Tan saying the personal-computer industry continues to face pressure.

Amazon falls 1.4 per cent after posting weaker summer profit than analysts expected. Investors also focus on its free cash flow, which shows a burn of $U.S.42.4 billion over the prior 12 months as the company spends $U.S.94.8 billion on property and equipment, mainly for artificial-intelligence investment.

Alphabet had already set the tone a day earlier, when its stock sank more than 12 per cent in its worst day on record after it told investors cash burn increased during the summer quarter. The Google and YouTube parent points to similarly large AI-related spending, reinforcing market concern that hundreds of billions of dollars in investment may not deliver sufficient returns.

"We're moving out of the hopes and dreams phase of the AI trade and into the 'show me' phase," Joe Tigay, portfolio manager at Equity Armor Investments, says in a note to investors. Nvidia drops 4.2 per cent and exerts the heaviest downward pressure on the S&P 500, even more than Intel.

Broader market pressure spreads to crypto and Asia

The U.S. market remains only 3.1 per cent below its all-time high, but trading is becoming more fragile as Tuesday's midterm elections approach. Concern about AI has also become a political issue for voters across party lines, while President Donald Trump has historically pointed to stock-market performance as a measure of success.

Pressure is also building in cryptocurrency-linked stocks after a hack at Binance, the world's biggest crypto exchange. Bitcoin falls below $U.S.77,000 from more than $U.S.86,000 earlier this month, and a U.S.-based blockchain intelligence firm says a North Korean unit is likely behind the attack affecting more than $U.S.6 billion worth of crypto.

Coinbase Global drops 10.6 per cent despite reporting stronger quarterly results than analysts expected. Strategy, which says it owns about 4 per cent of the total bitcoin supply, falls 7.8 per cent after also reporting stronger-than-expected profit and saying its chief financial officer will resign next week for personal reasons.

Outside the U.S., markets are mixed after sharper swings in Asia. South Korea's Kospi falls 3.5 per cent as AI-related concern hits its technology-heavy market, Hong Kong's Hang Seng rises 1.5 per cent, and Japan's Nikkei 225 loses 2.1 per cent after the Bank of Japan keeps interest rates steady, echoing decisions earlier in the week by the Federal Reserve and the European Central Bank.

In our earlier analysis of the S&P 500 slide, we highlighted how weakness in technology and semiconductor shares, along with doubts about the durability of AI-related investment, weighed on sentiment. We also noted that rising Treasury yields and a hotter inflation print amplified the pullback, pushing the index below key short-term moving averages and putting focus on nearby support and resistance levels.

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