The Nasdaq led a tumble in US stocks on Thursday as Treasury yields rose and Meta (META) and Microsoft (MSFT) earnings sparked worries about prospects for Big Techs amid rising AI costs.
The tech-heavy Nasdaq Composite (^IXIC) sank roughly 1.8%, while the S&P 500 (^GSPC) fell about 1%. The Dow Jones Industrial Average (^DJI) dropped roughly 0.6%, on the heels of losses for the major gauges.
Optimism for a Big Tech boost to stocks took a knock as investors digested Meta and Microsoft’s quarterly reports. While the results beat Wall Street estimates, both companies flagged that they will step up already high spending on AI infrastructure.
Concerns that would put pressure on profitability helped send shares in both Meta and Microsoft lower.
The unsettled mood spread to Amazon (AMZN) and Apple (AAPL), which round off this week’s “Magnificent Seven” earnings with reports after the close on Thursday. Shares in the tech megacaps stepped lower in early trading.
Bond yields surged on Thursday with the 10-year Treasury climbing to 4.33%. The US dollar index (DX-Y.NYB), which measures the greenback against a basket of currencies also rose. Overseas, UK bond selling intensified over worries of inflation amid fiscal stimulus and borrowing.
On Thursday morning, investors received the latest reading on the Personal Consumption Expenditures index, the last key inflation input for the Federal Reserve before its policy decision next week. Annual “core” PCE in September — which excludes food and energy prices — rose 2.7%, more than 2.6% expected by economists, and in line with a 2.7% rise in August.
Initial jobless claims declined by 12,000 to a five-month low of 216,000, versus estimates for 230,000. Investors were paying close attention to the data after an October surge in private payrolls muddied the picture ahead of the crucial monthly jobs report due for release on Friday.
