Intel Leads S&P 500 to Worst Day Since June as AI Spending Fears Deepen

U.S. equity markets closed lower on Friday as a broad sell-off in technology stocks marked the S&P 500’s worst single-day performance since June. The benchmark index dropped 1.8%, while the Nasdaq composite fell 2.9% and the Dow Jones Industrial Average lost 1.1%. The decline comes days before Tuesday’s midterm elections, with the market sitting just 3.4% below its all-time high.

Intel Inc. suffered a nearly 29% plunge, its steepest drop since 1974. The chipmaker reported a third-quarter profit that beat expectations, but its forecast for the final quarter of the year fell short of analyst estimates. CEO Lip-Bu Tan noted that the personal computer industry continues to face pressure, a comment that weighed heavily on investor sentiment despite the company’s strong current-quarter results.

Amazon.com Inc. shares sank 1.9% after the company reported a weaker summer profit than analysts projected. The more pressing concern for the market was the company’s cash flow, which showed a burn of $42.4 billion over the previous 12 months. Amazon spent $94.8 billion on property and equipment, primarily for artificial intelligence infrastructure, raising questions about the return on such massive capital expenditures.

Nvidia Corp., a central beneficiary of the AI buildout, fell 4.9%, exerting the heaviest drag on the S&P 500. This drop followed a more than 12% decline for Alphabet Inc. on Thursday, when the parent of Google and YouTube reported a larger summer cash burn than in the spring. Joe Tigay, a portfolio manager at Equity Armor Investments, described the shift in market sentiment in a note to investors: “We’re moving out of the hopes and dreams phase of the AI trade and into the ‘show me’ phase.”

Investors moved into safer assets as equity risk increased. The yield on the 10-year U.S. Treasury note fell to 4.93% from 4.98% late Thursday. This decline occurred even as Brent crude oil prices rose 2.4% to $113.43 per barrel, a factor that typically pushes yields higher by worsening inflation expectations. Oil prices remain near the high end of their range following the war with Iran.

Outside the tech sector, corporate earnings provided some support for the broader market. ExxonMobil Corp. climbed 1.8% and Chevron Corp. added 1.7% after both reported stronger summer profits than expected. Mondelez International rose 4% on better-than-anticipated growth, while Colgate-Palmolive Co. gained 2.9% as higher product prices drove revenue and profit above analyst forecasts.

In the cryptocurrency sector, stocks declined following a hack at Binance, the world’s largest exchange. A U.S.-based blockchain intelligence firm said a North Korean unit was likely responsible for the attack, which impacted more than $6 billion in crypto assets. Bitcoin price dropped below $77,000 from over $86,000 earlier in the month. Coinbase Global Inc. fell 13.6% and Strategy, which holds about 4% of the total bitcoin supply, dropped 8.3%.