Amazon and Intel Drag Wall Street Lower as AI Spending Fears Intensify

The S&P 500 index fell 1.3% on Friday, on pace to wipe out its gains for the entire month of October despite reaching an all-time high earlier in the period. The decline was driven primarily by a sharp drop in technology stocks, which pressured the Nasdaq composite down 2.5% as of 9:35 a.m. Eastern time. The Dow Jones Industrial Average lagged further behind, sliding 0.3%, or 173 points, as other sectors showed more resilience for a second consecutive day.

Amazon shares dropped 4.4% following a report showing the company generated weaker profits for the summer than analysts had projected. Investors reacted with particular concern to the company's cash flow metrics, which indicated that Amazon consumed $42.4 billion in free cash flow over the prior 12 months. The retailer spent $94.8 billion on property and equipment, with the bulk of those funds directed toward artificial intelligence infrastructure.

Intel experienced a more severe decline, tumbling 28.8% to approach its worst single-day drop since 1974. The chipmaker reported quarterly profits that exceeded analyst estimates, but its outlook for the final quarter of the year fell well short of market expectations. CEO Lip-Bu Tan stated that the personal computer industry continues to face pressure, a condition that directly reduces demand for Intel's central processing units.

The tech sell-off extends beyond individual earnings reports to include the cryptocurrency sector. Stocks in the industry fell sharply after a hack targeting Binance, the world's largest crypto exchange. A U.S.-based blockchain intelligence firm attributed the attack to a North Korean unit, noting that the incident affected more than $6 billion in cryptocurrency. Bitcoin prices slid toward $77,000, down from above $86,000 earlier this month.

Coinbase Global shares fell 12.7% despite reporting stronger quarterly results than expected. Strategy, a firm that holds approximately 4% of the total bitcoin supply, dropped 11.6% after announcing that its chief financial officer would resign for personal reasons next week. The company also reported profits that surpassed analyst forecasts.

Outside of technology, many companies reported stronger summer profits than anticipated, providing some support to the broader market. Mondelez International, the maker of Oreo cookies and Ritz crackers, climbed 4.6% on stronger-than-expected growth. Colgate-Palmolive rose 4.7% after higher global prices for its products contributed to better revenue and profit figures.

Energy stocks also advanced, with Exxon Mobil up 2.3% and Chevron adding 1.6% following strong quarterly earnings. Starbucks saw a more muted reaction, slipping 0.2% after reporting better-than-expected profits but missing revenue expectations. The S&P 500 is poised for a second straight day where the majority of constituent stocks rise, but their gains are offset by losses in larger, more influential Big Tech companies.

In the bond market, Treasury yields eased as investors sought safety in U.S. government debt. The yield on the 10-year Treasury fell to 4.93% from 4.98% late Thursday and from above 5.30% earlier in the month. This decline occurred even as oil prices rose, with Brent crude jumping 2% to $113.04 per barrel. The price remains near the high end of its range since the war with Iran elevated oil costs and inflation.

International markets showed mixed results following sharper declines in Asia. South Korea's Kospi index fell 3.5% on concerns regarding its tech-heavy composition, while Hong Kong's Hang Seng index climbed 1.5%. Japan's Nikkei 225 dropped 2.1% after the Bank of Japan decided to keep interest rates steady, a move that mirrored decisions made earlier in the week by the Federal Reserve and the European Central Bank.