Tech selloff deepens as AI spending doubts return
Stock indexes around the world retreated on Thursday after Meta Platforms' quarterly report brought fresh unease about the scale of spending tied to artificial intelligence, pushing investors toward the relative safety of US Treasuries. The Nasdaq, dragged down by semiconductor shares, lost 2.6% in its sharpest single-day percentage decline since early June, while MSCI's All-World gauge slipped 1.3%. Technology stocks had already weakened earlier in Seoul, Tokyo, Amsterdam and Paris.[S1][S2][S3]
Meta Platforms fell 7% following Wednesday's results. The company's third-quarter revenue came in above what analysts had expected, but its announcement that it would issue non-voting stock revived worries about its growing capital obligations and, more broadly, about the spending levels of the largest AI infrastructure buyers. A gauge of chipmakers, among the companies that have benefited most from AI outlays, dropped 6.7%, its worst daily percentage loss since June 23.[S1][S3]
Tesla, which also reported earnings and lowered its spending forecast, shed 3.1%. Reuters reported that some people inside Tesla are uneasy that public remarks by chief executive Elon Musk about a possible merger with SpaceX could draw shareholder scrutiny and make deal discussions harder. SpaceX shares finished 9% lower. According to the report, investors' changing assessment of AI spending has injected extra volatility into the market, and Thursday's Nasdaq slump came one day after a 1% gain.[S1]
Bonds draw buyers as yields post sharpest fall since 2023
US Treasuries advanced, driving yields down, as the equity decline enhanced the appeal of government debt as a haven. The benchmark 10-year note's yield dropped 19.3 basis points to 4.953%, the largest daily decline since March 10, 2023. It had climbed to 5.3645% on October 7, the highest level since April 2002; bond yields and prices move in opposite directions. The Dow Jones Industrial Average added 11.89 points to close at 52,867.98, while the S&P 500 lost 93.74 points, or 1.2%, to 7,663.43 and the Nasdaq Composite dropped 694 points, or 2.6%, to 26,008.86. MSCI's global stock measure fell 14.95 points to 1,122.93, its largest one-day drop since June, and the pan-European STOXX 600 declined 1.05%.[S1]
Oil climbs on Saudi attacks; France's fiscal strain widens
Houthi attacks in Saudi Arabia intensified worries about further interruptions to Middle Eastern energy supplies, lifting Brent crude by roughly 4%. Brent futures gained $4.35 to settle at $113.17 a barrel, a five-month high, while US West Texas Intermediate rose $2.32, or 2.4%, to settle at $99.47. Unsettled equity markets also supported the yen, which strengthened 0.75% to 156.96 per dollar, while the euro slipped 0.09% to $1.1222.[S1]
Anxiety over France's fragile public finances and ongoing street demonstrations pushed French markets into renewed turmoil. For the first time since 2013, the yield on the country's 10-year government bond climbed above that of equivalent US Treasuries, reflecting deepening unease about its worsening fiscal health and expanding debt burden. The benchmark 10-year yield was most recently 6.5 basis points higher at 5.06%, while the extra return investors demand for holding French debt over German Bunds reached its widest in 15 years.[S1]
