Stocks slump, bonds leap as AI giants' spending spooks investors
SPY•Technology shares fell as investors questioned whether rising AI spending would deliver adequate returns. Alphabet lost $500 billion in market value, while 10-year Treasury yields fell more than 7 basis points to 4.91%.
1. AI spending rattles markets
Tech shares sank as investors moved toward bonds and other havens over concerns that huge and rising AI spending may not deliver sufficient returns. Alphabet shares fell 12.6% on Wall Street and declined further after hours, wiping out $500 billion in market value as its AI spending turned cash flow negative. Intel shares plunged 23% after hours and Amazon shares fell 7%, sending Nasdaq 100 futures down 1.9%.
2. Asian shares retreat
Technology stocks sold off across Asia. South Korea's KOSPI fell more than 3%, putting it nearly 16% lower for October, while Japan's Nikkei fell more than 2% and was on course for a 5% monthly decline. China's CSI300 headed for its largest monthly fall in a decade amid concerns about demand for chips and data-centre equipment.
3. Bonds and havens rise
The 10-year U.S. Treasury yield dropped more than 7 basis points to 4.91%, bringing its October decline to about 37 basis points, its largest one-month drop since December 2023. The two-year yield fell more than 8 basis points to 4.57%. The yen rose about 0.3% to 157.20 per dollar, while oil prices rose as an attack on a tanker in the Strait of Hormuz highlighted supply risks.
