Tech sell-off deepens, sending Wall Street toward its worst day since June
In Canada, the S&P/TSX composite index was down about 2.3%
A sell-off for tech stocks is getting worse Friday on worries that Wall Street's frenzy around AI sent prices too high.
The S&P 500 dropped 1.9 per cent and was on track to erase its gain for October, even though it set its all-time high during the month.
asserted
it → deepen → month
The Nasdaq composite was likewise heading toward its worst day since June, as the weakness for technology stocks dragged it down 3.1 per cent, as of 1:20 p.m. Eastern time.
asserted
weakness → head → p.m.
Canada's main index, the S&P/TSX composite, dropped about 2.3 per cent mid afternoon.
asserted
index → drop → ?
Intel's stock led the way lower and is flirting with its worst day since 1974 after tumbling 30 per cent.
asserted
stock → lead → 1974
The chipmaker gave a forecast for profit in the final three months of this year that fell short of analysts' expectations, as CEO Lip-Bu Tan said the personal-computer industry continues to feel pressure.
asserted
industry → give → pressure
The drop came even though Intel reported a stronger profit for the latest quarter than analysts expected.
asserted
analysts → come → quarter
Amazon sank 2.1 per cent after reporting a weaker profit for the summer than analysts expected.
asserted
analysts → sink → summer
Potentially more concerning for investors was Amazon's reporting that it burned through $42.4 billion US of cash over the prior 12 months, according to a measure called free cash flow.
uncertain
it → burn → measure
It spent $94.8 billion US on property and equipment, primarily through investments in artificial-intelligence technology.
asserted
It → spend → technology
A day earlier, Alphabet's stock dropped more than 12 per cent to its worst day on record and almost single-handedly dragged the S&P 500 lower after telling investors it burned through more cash during the summer than the spring.
asserted
it → drop → spring
The company behind Google and YouTube cited similar, mammoth investments in AI.
asserted
company → cite → AI
Worries are rising about whether all those hundreds of billions of dollars will produce enough profit and productivity to make the investment worth it.
asserted
investment → rise → profit
At the same time, stocks of computer chip companies and other winners from the frenzy to build AI data centres have come under pressure on concerns that high interest rates may slow the further build out of data centres.
uncertain
rates → build → centres
"We're moving out of the hopes and dreams phase of the AI trade and into the 'show me' phase," said Joe Tigay, portfolio manager at Equity Armor Investments, in a note to investors.
asserted
Tigay → move → investors
A drop of 4.8 per cent for the stock price of Nvidia, whose chips have made it the poster child of the AI frenzy, was the heaviest force pulling the S&P 500 downward, even more than Intel.
asserted
it → make → Intel
In the cryptocurrency industry, meanwhile, stocks tumbled following a hack on the world's biggest crypto exchange.
asserted
stocks → tumble → exchange
The price of bitcoin fell toward $77,000 US from more than $86,000 US earlier this month, and a U.S.-based blockchain intelligence firm said a North Korean unit was likely behind the attack that impacted more than $6 billion US worth of crypto at Binance.
asserted
that → fall → Binance
Outside of tech, stocks were more resilient as many rallied after reporting stronger profits for the summer than analysts expected.
asserted
analysts → rally → summer
Nearly as many stocks rose in the S&P 500 index as fell.
asserted
stocks → rise → index
ExxonMobil climbed two per cent, and Chevron added 1.7 per cent after the oil giants both reported stronger profit for the summer than analysts expected.
asserted
analysts → climb → summer
Mondelez International rose 3.9 per cent due to better than expected growth and Colgate-Palmolive climbed 3.6 per cent after higher prices for its products helped it deliver better revenue and profit than analysts expected.
asserted
analysts → rise → revenue
Expectations are high for U.S. companies' ability to make bigger profits, even though people around the world are feeling discouraged about high inflation and high fuel prices.
asserted
people → make → inflation
Such expectations are what drove the S&P 500 to its record earlier this month.
asserted
what → drive → record
In the bond market, Treasury yields eased in a signal that investors were buying U.S. government bonds in search of a safer option.
asserted
investors → ease → option
The yield on the 10-year Treasury fell to 4.94 per cent from 4.98 per cent late Thursday and from more than 5.30 per cent earlier this month.
asserted
yield → fall → cent
In stock markets abroad, indexes were mostly lower in Europe following sharper swings in Asia.
asserted
indexes → follow → Asia
South Korea's Kospi dropped due to AI worries, while Hong Kong's Hang Seng climbed slightly.
asserted
Seng → drop → worries
The Aporia
