Stocks slump, bonds leap as AI giants' spending spooks investors
SPY•Asian tech shares fell and bonds rallied as investors questioned whether huge AI spending would generate adequate returns. Alphabet lost 12.6% and about $500 billion in market value, while 10-year Treasury yields fell more than 7 basis points to 4.91%.
1. AI spending rattles stocks
Alphabet shares fell 12.6% on Wall Street and slid further after hours, wiping out about $500 billion in market value as heavy AI spending turned its cash flow negative. Intel shares plunged 23% after hours and Amazon fell 7%, sending Nasdaq 100 futures down 1.4% and weighing on Asian chipmakers.
2. Asian markets retreat
South Korea's KOSPI fell 5%, bringing its October decline to more than 17%, while Japan's Nikkei dropped 3%. China's CSI300 headed for its largest monthly fall in a decade as investors worried that slower demand for chips and data-centre equipment could hurt revenues.
3. Bonds and havens rally
The 10-year U.S. Treasury yield fell more than 7 basis points in Tokyo trading to 4.91%, down about 37 basis points for October, its largest monthly decline since December 2023. The 2-year yield fell more than 8 basis points to 4.57%, while the yen rose about 0.3% to 157.20 per dollar. The Bank of Japan kept rates unchanged; its plan to accelerate exchange-traded fund sales next year was followed by a decline in Nikkei futures.
