It was a down day for the US markets on Wall Street amidst disappointing tech results, but futures plunged even further after markets close as more results left market participants concerned about the future of the AI and tech trade. Losses were seen across the AI and Software segment.
The Dow Jones ended 130 points lower on Thursday, recovering slightly from the lows of the day, while the S&P 500 fell 0.3%. The bigger underperformance came from Nasdaq, which fell 1.4%. Nasdaq futures have plunged over 500 points this morning as results reported after market hours by Amazon and Intel sent stocks tumbling, thereby pressuring the index.
While the Nasdaq futures are down over 500 points, the Dow futures are flat and the S&P 500 futures are down 50 points.
Why Did The Nasdaq Underperform On Thursday?
The biggest drag on the Nasdaq on Thursday were shares of Alphabet, which fell 13%, the most on record, wiping out $500 billion of its market capitalisation in a single trading session. The street did not like Alphabet’s negative free cash flow position at the end of its third quarter, triggering the sell-off.
It was not just the tech names. Software services provider ServiceNow also plunged 27%, dragging its peers lower with it after disappointing results. The fall seen in ServiceNow shares was the biggest on record for the stock.
Afterhours Results Add To The Pressure
Results reported by both Intel and Amazon disappointed the street, leading to the stocks selling off sharply in the extended trading session.
Amazon’s results were a miss on expectations, even as the cloud business did well. The stock’s free cash flow was a negative $42.4 billion from just over $7 billion in the previous quarter. Shares fell nearly 8% in extended trading. The company’s guidance, at the mid-point of the range, was also below analyst expectations.
Similarly, Intel’s results were a miss, the management gave some dour commentary in the earnings call, and its guidance turned out to be well below what the street had anticipated. The stock fell 23% in extended trading, also proof of the kind of run-up it had earlier in the year. Even after regular closing on Thursday, the stock is up 133% for the year.
A fallout of the tech sell-off has been similar to what was witnessed when a similar sell-off took place a couple of weeks ago. The US 10-year bond yields fell again, now at 4.93% from the 5.05% mark it had rebounded to on Thursday.
Elsewhere, oil prices recovered most of their losses overnight amidst conflicting reports on whether or not the US will resume its military campaign against Iran after the mid-term polls are over. Brent crude remains around the $115 a barrel mark.
Amidst the flood of earnings, the macro data reported took a backseat. Q3 GDP growth for the US turned out to be better than expectations, the September PCE inflation print was largely in-line with the projections as well.
Nasdaq falls, futures plunge another 500 points as tech results continue to disappoint