Wall Street slips as AI concerns weigh on tech stocks

Wall Street ended the week on a weak note as technology stocks led a broad market sell-off. The S&P 500 finished 1.80% lower, the Nasdaq dropped 3.50%, and the Dow lost 572 points after several high-profile earnings reports weighed on investors. Over the week, the S&P 500 lost 0.90%, the Nasdaq fell 2.40% and the Dow declined 1.20%. 

Intel suffered the sharpest fall, plunging 28.60% after issuing a weaker outlook than analysts had anticipated. Amazon also slipped 1.40%, with its third-quarter results missing forecasts and the company confirming plans to increase spending on infrastructure. Much of the concern centred on artificial intelligence (AI). Investors are becoming more cautious about signs that growth in AI-related activity may be slowing and are questioning whether the enormous sums being invested in the sector will deliver the returns markets have been expecting. The pressure was felt throughout the chip industry. Nvidia fell 4.20%, AMD lost 11%, Broadcom declined 5.50%, and Micron dropped 5.30%. Alphabet also continued to struggle, easing a further 1.40% after its 12.60% fall in the previous session. 

Energy stocks, however, offered some relief. ExxonMobil climbed 2.20% and Chevron rose 1.70% after both companies reported stronger-than-expected third-quarter results. 

European shares closed lower on Friday, with the Euro Stoxx 50 down by more than 1% and the wider Stoxx 600 losing around 0.50%. Despite the day’s weakness, the Stoxx 50 finished the week 1% higher, while the Stoxx 600 gained 2.10%. Over October, the Stoxx 50 fell 2.20%, while the Stoxx 600 rose 1.90%. 

Technology was the weakest sector on Friday, falling close to 3% as disappointing company updates added to the pressure on the sector. ASML dropped around 6%, while Infineon and STMicroelectronics lost more than 6% and 5%, respectively. Basic resources and banks also struggled. Meanwhile, eurozone data pointed to slower economic growth during the third quarter. 

Germany’s DAX fell by roughly 1%, while France’s CAC saw a smaller decline. The FTSE 100 held steady, outperforming its European peers, as strong results from AstraZeneca and BP helped to offset weakness among banks and miners. AstraZeneca climbed more than 7% after third-quarter core operating profit and earnings per share beat expectations, with the company also reiterating its guidance. GSK added roughly 2%. BP rose by more than 0.50% after reporting profits of $8.46 billion, well above forecasts, helped by strong refining margins. Shell also closed marginally higher. Among consumer companies, Unilever gained 2.20% and British American Tobacco rose 1.70%. 

Asian markets ended Friday in a mixed and cautious fashion, as the sharp fall in US technology and semiconductor shares spread through the region. Weak earnings from several major American technology companies, combined with concerns over the scale of spending on AI infrastructure, kept investors on edge. Hong Kong’s Hang Seng Index was the notable outperformer, rising 1.46% to close at 23 294.42, with a gain of 335.77 points. The market bucked the wider regional trend as selected internet and locally focused shares recovered, while Japan’s Nikkei 225 fell 2.12% to 63 290.11, ending a short run of gains as chip-related and technology-heavy companies came under sustained pressure. China’s Shanghai Composite also weakened, dropping 1.44% to close at 3 599.02. 

South African equities came under significant pressure on Friday, with the JSE All Share Index declining 2.20% and the Top 40 falling 2.42%. Resource shares led the losses, with the Resource 10 declining 5.12% and the Metals and Mining Index falling 6.19%. Financial shares also weakened, with the Financial 15 losing 1.95%, while the Industrial 25 was comparatively resilient, declining 0.06%. The weakness in resource shares coincided with a sharp correction in precious metals prices. The rand weakened 0.66% against the US dollar to R16.73, 0.74% against the British pound to R22.40 and 0.39% against the euro to R18.66. 

Brent crude traded at $117.88 a barrel, gaining 2.61% at 19h14 SAST, amid continued geopolitical tensions and concerns about potential disruptions to energy supplies. In contrast, gold declined 3.44% to $3 881.84 an ounce, while silver fell 6.34% to $49.06 an ounce. Platinum lost 4.05% to $1 433 an ounce. Precious metals remained under pressure amid investor selling, expectations of higher interest rates and concerns about industrial demand.