US: Nasdaq ends 2.8% lower on sell-off of tech giants
THE Nasdaq tumbled nearly three per cent on Thursday on a sell-off in most tech giants following earnings from Microsoft and Meta that raised worries about the costs of artificial intelligence breakthroughs.
The tech-rich index fell 2.8 per cent to 18,095.15, with Apple and Amazon falling ahead of their results, following big drops by Microsoft and Meta.
The Dow Jones Industrial Average finished down 0.9 per cent at 41,763.46, while the broad-based S&P 500 shed 1.9 per cent to 5,707.45.
Both Microsoft and Meta topped earnings estimates, but tumbled after signalling plans to ratchet up AI investments. Microsoft ended down 6.1 per cent while Meta lost 4.1 per cent.
“Earnings expectations have been high and they’re meeting, but they’re not meeting to the same degree they were,” said Jack Ablin, chief investment officer of Cresset Capital Management.
But Ablin predicted the market rally could broaden beyond tech shares after the US presidential election.
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Analysts have also been monitoring the rise in US Treasury bond yields amid expectations the Federal Reserve may back off significant interest rate cuts amid US economic data that has generally been solid.
The personal consumption expenditures price index, an inflation reading closely monitored by the Federal Reserve, eased to 2.1 per cent in the 12 months to September, down from 2.3 per cent in August.
The PCE report is probably good enough for central bankers “to continue cutting rates, even though core prices are still a bit faster than the (Fed) would like to see,” said a note from High Frequency Economics.
“The strong spending and income growth tells them there is no need to cut aggressively to avert a recession.”
Markets are looking forward to Friday’s monthly jobs report from the Department of Labor. AFP
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