US stocks crash: US stock markets has witnessed a sharp selloff on Friday, with the Nasdaq Composite falling nearly 3 per cent as disappointing quarterly results from Intel and Amazon reignited concerns over heavy investments in artificial intelligence (AI) and the time companies may take to generate returns.
All three major US stock indexes ended the session in the red, with technology stocks bearing the brunt of the selling pressure. The Nasdaq recorded its biggest single-day percentage decline since June 5, while the S&P 500 and Nasdaq also ended October with monthly losses, Reuters reported.
The Dow Jones Industrial Average fell 571.98 points, or 1.09 , to close at 51,770.58. The S&P 500 dropped 139.30 points, or 1.80 per cent, to settle at 7,580.21, while the Nasdaq Composite plunged 747.73 points, or 2.84 per cent, to 25,440.68.
In terms of market capitalisation, the Dow Jones lost USD 312.22 billion, while the S&P 500 and Nasdaq Composite shed USD 1.23 trillion and USD 1.20 trillion, respectively.
AI investment returns back in focus
The latest selloff followed quarterly results from Intel and Amazon, released late Thursday, which failed to meet investor expectations. The results brought renewed attention to the rising cost of building AI infrastructure and questions over whether companies will be able to generate adequate returns from their investments.
Chip stocks faced heavy selling pressure, dragging the Philadelphia SE Semiconductor Index towards a monthly loss.
Investors are increasingly scrutinising the scale of AI spending and the timeline for companies to turn these investments into profits.
“It’s fair to say that this week, not just today, has been very much about the future of AI and what that’s going to look like, whether there will be a positive return on investment and if so, how quickly,” Oliver Pursche, senior vice president at Wealthspire Advisors in New York, told Reuters.
He added that companies meeting high investor expectations were performing well, while those falling short were being punished.
“Companies that are performing and meeting the very lofty expectations that have been set are doing well,” Pursche said. “Those that are falling short and seem to be missing the mark or not executing as expected are getting punished.”
Earnings season offers some support
Despite the sharp fall in technology stocks, corporate earnings have remained relatively resilient. According to LSEG data cited by Reuters, 299 S&P 500 companies had reported their third-quarter results, with 82% beating consensus estimates.
Analysts expect S&P 500 earnings to grow 31.6 per cent YoY.
Energy stocks also offered some support, with Exxon Mobil and Chevron beating quarterly profit expectations. Both companies benefited from stronger margins amid energy supply disruptions.
Meanwhile, Starbucks shares slipped after the company forecast an annual revenue decline following its planned divestiture of its Chinese business.
Crypto stocks fall after Binance hacking report
Cryptocurrency-related stocks also came under pressure. Shares of Coinbase, Strategy and Robinhood declined following reports that hackers had stolen USD 6.3 billion from Binance, the world’s largest cryptocurrency exchange.
How did US markets perform in October?
The S&P 500 and Nasdaq Composite ended October with monthly losses, while the Dow Jones managed to retain a gain. All three major US indexes finished the week lower, Reuters reported.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)