US stocks closed October with a sharp sell-off in technology shares on Friday. The Nasdaq Composite fell 2.84 per cent to 25,442.31, the S&P 500 lost 1.83 per cent to 7,578.97 and the Dow Jones Industrial Average dropped 1.06 per cent to 51,785.82.
Intel's shares fell 29 per cent, their worst day since 1974, after the chipmaker issued fourth-quarter revenue and earnings forecasts well below expectations. It cited weak demand for personal computers and an accident at one of its factories in Israel. Reddit also fell 29 per cent, despite beating forecasts for the third quarter, after its outlook for the final three months of the year disappointed. Amazon's results, published on Thursday, added to the pressure.
A harder test for AI
The sell-off capped a week in which investors punished heavy spending on artificial intelligence that is not yet producing cash. Alphabet fell after burning $9.1bn of free cash in the third quarter, while Microsoft, whose spending came in below expectations, was rewarded.
"Strong AI demand is no longer enough on its own," said Daniela Hathorn, a senior market analyst at Capital.com.
US government bond yields fell as investors sought safety, with the ten-year Treasury yield down about 0.07 percentage points to around 4.92 per cent in afternoon trading. Brent crude rose about 2.5 per cent to $117.80 a barrel, as Washington weighed renewed strikes on Iran after next week's midterm elections.
