Tech giants' spending spooks investors and drives bonds rally
SPY•Worries that rising AI spending may not deliver sufficient returns weighed on tech shares, while U.S. Treasuries rallied toward their biggest monthly gain in nearly three years. Nasdaq 100 futures fell more than 2.5%, and 10-year Treasury yields dropped about 8 basis points to 4.91%.
1. Tech shares slide
Tech shares fell as investors questioned whether massive AI spending would generate sufficient returns. Nasdaq 100 futures pointed to a decline of more than 2.5%; Intel shares fell 25% after hours and Amazon shares dropped 6% following results that showed they burned through cash. Alphabet shares fell 12.6% on Thursday, wiping out $500 billion in market value, and slipped further after hours as its AI spending turned cash flow negative.
2. Treasuries rally
U.S. Treasuries surged, with the 10-year yield down about 8 basis points to 4.91%, putting it on track for its largest monthly decline since December 2023. The Federal Reserve kept rates on hold on Wednesday without giving a firm projection for when it might next raise them.
3. Other markets move
European stocks were down 0.3%, while bitcoin traded 1.7% lower at $77,471 after hitting a six-week low. Oil rose more than 2%, while gold fell to its lowest since mid-July at $3,970. The Bank of Japan held rates as expected and announced plans to sharply accelerate ETF sales next year.
