Disappointing corporate earnings reports triggered the latest downturn, pulling the S&P 500 down by over 1% and putting it on track to erase all of its October gains. Heavy spending forecasts from major hyperscalers, such as Meta Platforms, Alphabet, and Amazon, have alarmed shareholders worried about soaring data center costs. Intel particularly intensified the market slump after issuing a bleak final-quarter profit forecast that sent its shares plunging nearly 30%.
Key points
Massive capital expenditure on artificial intelligence infrastructure is sparking widespr…: Massive capital expenditure on artificial intelligence infrastructure is sparking widespread investor worry over escalating corporate cash burn.
Tech market losses have now erased approximately $2 trillion in value from the Nasdaq 100…: Tech market losses have now erased approximately $2 trillion in value from the Nasdaq 100 over the past month.
Amazon and Alphabet experienced notable share drops after reporting weaker summer profits…: Amazon and Alphabet experienced notable share drops after reporting weaker summer profits and increased spending linked to data center expansion.
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A sell-off of tech stocks that began earlier this month and gained steam with disappointing earnings from leading tech companies drove US markets down by hundreds of billions of dollars Friday. In total, the decline has knocked nearly $1tn in value off the tech-heavy Nasdaq exchange in one week and erased about $2tn in a month.
The S&P 500, the index of the 500 most valuable companies in the US, fell by more than 1% Friday, losing hundreds of billions of dollars in market value. It was on track to erase its gain for October, even though it set its all-time high during the same month. The weakness for technology stocks dragged the Nasdaq composite down even further, more than 3%, also erasing hundreds of billions in value. The Dow Jones Industrial Average fell less.
More than $2tn in market value is set to be wiped from the Nasdaq 100 this month, as big tech earnings intensified investor scrutiny of whether the billions being poured into artificial intelligence can generate returns quickly enough.
Blockchain analytics firms suspect the state-backed Lazarus Group breached Binance's hot wallet signing system using special authorization to orchestrate a massive $6.3 billion cyberheist. The operation highlights Pyongyang's reliance on digital theft to fund its regime through elite units recruited from top universities. While the exchange has contained the bulk of the damage, the incident underscores the severe financial risks posed by increasingly sophisticated state-sponsored cyber warfare.
Investors grew increasingly alarmed by the massive capital expenditures poured into artificial intelligence infrastructure without clear immediate returns, while looming midterm elections added broader market uncertainty. Semis and mega-cap tech companies bore the brunt of the downturn, even as traditional corporate earnings outside the tech space offered pockets of stability. The flight from risk also drove traders toward the safety of government bonds.
Commodity analysts are currently re-evaluating the prevailing negative sentiment across the industrial metals sector to determine if price expectations have fallen too far. This scrutiny comes as participants seek to gauge whether prevailing pessimism accurately reflects underlying physical supply and demand fundamentals. A recalibration of these viewpoints could influence forward positioning and broader market sentiment.