Intel's 28.6% slide leads AI sell-off as S&P 500 posts worst day since June
Intel fell 28.6% on Friday, its worst single-day drop since 1974, as a sell-off in technology stocks deepened on worries that Wall Street's artificial-intelligence frenzy has pushed prices too high. The S&P 500 slid 1.8% for its worst day since June and closed a third straight losing week, the Nasdaq composite dropped 2.9% and the Dow Jones Industrial Average lost 572 points, or 1.1%. The index remains only 3.1% below its record high.
The chipmaker's forecast for profit in the final three months of the year fell short of analysts' expectations, with chief executive Lip-Bu Tan saying the personal-computer industry continues to feel pressure, even as Intel reported a stronger profit for the latest quarter than expected. Nvidia's 4.2% fall was the heaviest single drag on the S&P 500, outweighing Intel, as chipmakers and other builders of AI data centres came under pressure on concerns that high interest rates may slow the build-out. "We're moving out of the hopes and dreams phase of the AI trade and into the 'show me' phase," Joe Tigay, portfolio manager at Equity Armor Investments, said in a note to investors.
Amazon slipped 1.4% after a weaker summer profit than analysts expected and disclosure that it burned through $42.4 billion of cash over the prior 12 months on a free-cash-flow measure, having spent $94.8 billion on property and equipment, primarily AI investments. A day earlier Alphabet fell more than 12%, its worst day on record, after reporting heavier cash burn tied to similar spending.
Crypto stocks also tumbled after a hack on Binance, the world's biggest crypto exchange. Bitcoin fell below $77,000 from more than $86,000 earlier this month, and a US-based blockchain intelligence firm said a North Korean unit was likely behind the attack, which affected more than $6 billion worth of crypto. Coinbase Global fell 10.6% despite stronger-than-expected results, and Strategy, which says it owns about 4% of bitcoin's total supply, dropped 7.8% while announcing its chief financial officer will resign next week for personal reasons.
Outside tech, stocks were more resilient, with nearly as many S&P 500 members rising as falling. ExxonMobil climbed 2.2% and Chevron 1.8% on stronger summer profits, Mondelez International rose 3.9% and Colgate-Palmolive added 2.3%. The S&P 500 closed at 7,580.07, the Dow at 51,770.31 and the Nasdaq at 25,437.00. The 10-year Treasury yield eased to 4.93% from 4.98% as investors sought safer assets, even as Brent crude rose 2.4% to $113.43 a barrel. The Kospi fell 3.5%, the Nikkei 225 lost 2.1% after the Bank of Japan held rates steady, and the Hang Seng gained 1.5%.
