Tech shares slumped on Friday as investors worried that rising AI spending may not deliver sufficient returns. Nasdaq 100 futures pointed lower, while US bonds headed for their biggest monthly gain in nearly three years.
Tech shares slumped on Friday and US bonds surged toward their biggest monthly gain in nearly three years, as investors worried that huge AI spending may not pay off. Futures pointed to a drop of more than 2% in the Nasdaq 100 later in the session.
Big tech results rattle the Nasdaq
In out-of-hours trading, Intel shares plunged 23% and Amazon fell 7% after their results showed they burned through cash.
Alphabet's shares fell 12.6% on Wall Street on Thursday and slid a little further after hours, wiping out $500 billion in market value as AI spending turned its cash flow negative.
Investors also fret about what price hikes could do to demand for devices like smartphones and PCs. Anthropic's potentially record-breaking IPO could prove the next big test of sentiment. According to Arbuthnot Latham's Jason Da Silva: "The next key milestone will be the Anthropic IPO, to see how that lands."
Bonds rally and haven currencies firm
Tech jitters fed a rush to bonds, which got further support from the Federal Reserve's decision on Wednesday to keep US interest rates on hold. Benchmark 10-year Treasury yields fell around 7 basis points to 4.92% and were on track for their largest one-month drop since December 2023.
The risk-averse mood also lifted haven currencies such as the yen and Swiss franc. The yen was slightly higher at 157.30 per dollar.
Other markets feel the strain
Bitcoin hit a six-week low before cutting losses to trade 1.1% lower at $77,876, as a potentially record-breaking hack at Binance added to the nerves. European stocks opened down 0.2%, with the relative lack of big tech stocks helping limit losses.
Source: Investing.com
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