In brief
U.S. market indices dropped in the middle of a second week of steep losses when Amazon and Alphabet announced earnings misses that raised doubts about the long‑term viability of large AI capital outlays. Tech and semiconductor shares took the biggest hit, while energy and consumer staples were the only sectors to rise. Higher oil prices and hawkish comments from Federal Reserve officials added pressure to an already weary market.
U.S. stocks fell sharply on Friday after Amazon and Alphabet announced disappointing quarterly results, igniting concerns that the massive capital expenditures on artificial intelligence may not be sustainable.
The Dow Jones Industrial Average dropped 572.25 points, or 1.09 percent, to 51,770.31; the S&P 500 fell 140.32 points, or 1.82 percent, to 7,580.07; and the Nasdaq Composite plunged 747.73 points, or 2.86 percent, ending at 25,437.
Technology stocks led the severe sell‑off, tumbling 4.24 percent, followed by industrials which lost 1.57 percent. Eight of the 11 primary S&P 500 sectors finished in the red, with energy and consumer staples the only sectors to climb, up 1.91 percent and 1.38 percent respectively.
Amazon shares dipped 1.41 percent while Alphabet’s stock extended a sharp downward trajectory after reporting its steepest single‑day percentage decline in more than two decades. The rout also spread to the semiconductor and hardware sectors; Intel’s shares plunged 28.58 percent after its Q4 revenue outlook fell well short of Wall Street estimates, and SanDisk fell 13.47 percent despite beating first‑quarter earnings forecasts, as investors looked past its announcement of an eight‑for‑one forward stock split.
Commodity markets added fresh headwinds when crude oil futures gained over 2 percent, with Brent crude climbing to $117.64 per barrel and West Texas Intermediate to $104.12. The rise in oil prices stoked lingering headline inflation worries.
Monetary policy anxieties were reinforced by hawkish commentary from Federal Reserve officials following Wednesday’s rate‑pause decision. Federal Reserve Bank of St. Louis President Alberto Musalem warned that inflation remains excessively high and broad‑based, emphasizing that the bank must act soon to prevent elevated prices from becoming entrenched. Federal Reserve Bank of Richmond President Tom Barkin signaled that policy remains pointed toward higher borrowing costs to rein in persistent inflation, noting that the key question facing the Fed is the pace and extent of future tightening.
Parallel to the U.S. market moves, U.S. tech stocks fell for a second consecutive day as concerns rose over the hundreds of billions of dollars firms are investing in artificial intelligence. Analysts cautioned that the current AI spending, which is approaching $1 trillion, could strain earnings and test the resilience of the tech cycle.
