A selloff for tech stocks got even worse on worries that Wall Street’s frenzy around artificial-intelligence technology sent prices too high.
asserted
frenzy → get → prices
The S&P 500 tumbled 1.8 per cent for its worst day since June, and it closed out a third straight losing week.
asserted
it → tumble → week
The weakness for technology stocks dragged the Nasdaq composite down a market-leading 2.9 per cent, while the Dow Jones Industrial Average dropped 572 points, or 1.1 per cent.
asserted
Average → drag → composite
The Australian sharemarket is set to dip, with futures pointing to a slide of 4 points at the open.
asserted
futures → set → open
The Australian dollar was trading at US70.29¢.
asserted
dollar → trade → US70.29¢.
The US stock market remains only 3.1 per cent below its all-time high, which has boosted the value of workers’ retirement accounts, but it’s become increasingly shaky as Tuesday’s midterm elections in the United States approach.
asserted
elections → remain → States
Worries about AI in general have already become a concern for voters across political parties, and President Donald Trump has historically used the stock market’s performance as a measure of his own success.
asserted
Trump → become → success
Intel’s stock led the way lower and plunged 28.6 per cent for its worst drop since 1974.
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 fell 1.4 per cent after reporting a weaker profit for the summer than analysts expected.
asserted
analysts → fall → summer
Potentially more concerning for investors was Amazon’s reporting that it burned through $US42.4 billion ($60.3 billion) of cash over the prior 12 months, according to a measure called free cash flow.
uncertain
it → burn → measure
It spent $US94.8 billion 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 dragged the S&P 500 down 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 the 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 4.2 per cent for Nvidia, the chip company that became the poster child of the AI frenzy, was the heaviest force pulling the S&P 500 downward, outweighing even Intel.
asserted
that → become → 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 below $US77,000 from more than $US86,000 earlier this month, and a US-based blockchain intelligence firm said a North Korean unit was likely behind the attack that impacted more than $US6 billion worth of crypto at Binance.
asserted
that → fall → Binance
Coinbase Global fell 10.6 per cent even though it reported stronger results for the latest quarter than analysts expected.
asserted
analysts → fall → quarter
Strategy, which says it owns about 4 per cent of the total supply of bitcoin, fell 7.8 per cent.
asserted
it → say → bitcoin
It also reported a stronger profit for the latest quarter than analysts expected, while saying its chief financial officer will resign next week for personal reasons.
asserted
officer → report → reasons
Binance customers pulled $US3.64 billion, or 2.1 per cent of its assets, as the world’s biggest cryptocurrency exchange went back online on Sunday after the hack.
asserted
exchange → pull → hack
Binance said withdrawals were stabilising after an initial spike and deposit volumes had remained “substantial”.
asserted
volumes → say → spike
The exchange said it had now covered 95 per cent of the $US6.3 billion of stolen assets.
asserted
it → say → assets
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 within the S&P 500 index as fell.
asserted
stocks → rise → index
ExxonMobil climbed 2.2 per cent, and Chevron added 1.8 per cent after the oil giants reported stronger profit for the summer than analysts expected.
asserted
analysts → climb → summer
Mondelez International rose 3.9 per cent after the company behind Oreo cookies and Ritz crackers reported stronger-than-expected growth.
asserted
company → rise → growth
Colgate-Palmolive climbed 2.3 per cent after higher prices for its products around much of the world helped it deliver better revenue and profit than analysts expected.
asserted
analysts → climb → revenue
Expectations are high for US 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
All told, the S&P 500 fell 140.32 points to 7,580.07.
asserted
S&P → tell → 7,580.07
The Dow Jones Industrial Average dropped 572.25 to 51,770.31, and the Nasdaq composite sank 747.73 to 25,437.00.
asserted
composite → drop → 25,437.00
In the bond market, Treasury yields eased in a signal that investors were buying US government bonds in search of something safer to own.
asserted
investors → ease → something
The yield on the 10-year Treasury fell to 4.93 per cent from 4.98 per cent late Thursday and from more than 5.30 per cent earlier in the month.
asserted
yield → fall → month
Treasury yields fell even though oil prices bounced higher, something that usually drives yields upward because it worsens inflation.
asserted
it → fall → inflation
The price for a barrel of Brent crude oil rose 2.4 per cent to $US113.43.
asserted
price → rise → US113.43
…and 4 more, not listed.
The Aporia
