U.S. Tech Stocks Experience Significant Sell-Off as Market Declines
NEW YORK (AP) — A pronounced decrease in technology shares is cascading into Friday, exerting downward pressure on the U.S. stock market, primarily driven by Intel and Amazon.
The S&P 500 retracted by 1.1%, positioning it on course to negate its earlier October gains despite achieving an historic high during the month.
The notable decline in tech stocks precipitated a 2% decrease in the Nasdaq composite by 10 a.m. Eastern Time, while other sectors exhibited more resilience for a consecutive day.
Conversely, the Dow Jones Industrial Average suffered a more modest decline of 0.3%, amounting to a 176-point drop.
Intel plummeted by 28.9%, edging dangerously close to its most devastating day since 1974, despite the company reporting a quarterly profit exceeding analysts’ anticipations.
However, its forecast for profits in the last quarter of the year fell significantly short of expectations. CEO Lip-Bu Tan articulated ongoing pressures within the personal-computer sector, consequently dampening demand for Intel’s CPUs.
Meanwhile, Amazon’s stock decreased by 2% following an uninspiring summer earnings report. More troubling for investors is Amazon’s revelation of a substantial cash burn of $42.4 billion over the previous year, as measured by free cash flow.
The company committed a staggering $94.8 billion towards property acquisitions and capital expenditures, predominantly through investments in artificial intelligence technologies.
On the previous day, Alphabet’s stock experienced a dramatic drop exceeding 12%, marking its worst single-day performance ever after alerting investors to heightened cash expenditures during the summer, fueled by extensive AI investments.
Mounting concerns have arisen regarding the efficacy of the extensive financial resources dedicated—totaling hundreds of billions—toward generating sufficient profits and productivity to justify such outlay.
Simultaneously, stocks of semiconductor manufacturers and other beneficiaries of the AI data center boom have faced declining valuations, hindered by apprehensions that rising interest rates may impede further expansion of data infrastructures.
Notably, Nvidia’s stock faltered by 2.7%, a severe contributor to the downward movement of the S&P 500, overshadowing even Intel’s troubles.
In the cryptocurrency sector, stocks succumbed to declines following a security breach involving the largest cryptocurrency exchange.
The price of Bitcoin plummeted from over $86,000 earlier this month to around $77,000, as a U.S.-based blockchain intelligence firm indicated that a North Korean entity likely orchestrated the breach, impacting more than $6 billion worth of cryptocurrency at Binance.
Coinbase Global’s shares fell by 10.8%, despite the company reporting quarterly results that surpassed analyst expectations.
Strategy, claiming ownership of approximately 4% of the total Bitcoin supply, fell by 8.4%, while also exceeding profit forecasts but announcing its chief financial officer’s impending resignation for personal matters.
Such declines overshadowed robust performances from other sectors of Wall Street, where numerous stocks rallied following strong summer earnings surpassing analyst predictions.
The market appears poised for a second consecutive day where the majority of S&P 500 stocks rise, yet are overwhelmed by the substantial losses of major tech players.
Exxon Mobil climbed by 2.2%, complementing Chevron’s 1.6% increase after both oil titans reported stronger-than-expected summer profits.
Mondelez International surged by 3.5% after the corporation behind iconic brands such as Oreo and Ritz crackers posted impressive growth figures.
Colgate-Palmolive saw an increase of 1.9% on the back of heightened product pricing worldwide, which bolstered its revenue and profit beyond market expectations.
Starbucks fell by 1.1%, despite reporting better-than-expected profits, as the company’s revenue for the quarter fell short of market forecasts.
Expectations remain elevated for U.S. firms regarding profitability growth, even amid global sentiments marked by high inflation and soaring fuel costs. Such anticipations catalyzed the S&P 500’s ascent to its record high earlier this month.
In the bond pavilion, Treasury yields softened, indicating a migration of investors towards the perceived safety of U.S. government bonds.
The yield on the decade-term Treasury dipped to 4.94%, down from 4.98% late Thursday and significantly lower than the 5.30% seen earlier this month.
Treasury yields decreased notwithstanding the upward trajectory of oil prices, a factor typically linked to inflationary pressures that would elevate yields.
The cost for a barrel of Brent crude oil rose by 2.4% to $113.45, approaching a peak that has been characteristic since the conflict with Iran intensified prices and inflation.
In international markets, European indices exhibited mixed performances following pronounced movements in Asia.
South Korea’s Kospi fell sharply by 3.5%, shaken by tech sector apprehensions, while Hong Kong’s Hang Seng index rebounded with a 1.5% gain.
Japan’s Nikkei 225 decreased by 2.1%, following the Bank of Japan’s decision to maintain steady interest rates, mirroring recent choices made by the Federal Reserve and the European Central Bank.
Source link: Bostonherald.com.
