Stocks retreat as tech mood sours, oil prices jump
Equities sank Thursday as tech firms resumed their downward spiral after a mixed bag of earnings from Wall Street titans, while rising oil prices soured sentiment. AI-linked companies continued the rollercoaster ride they have endured since hitting record highs in June amid worries over colossal investment sums and their timeline for profitability, with growing debt-servicing costs adding to the…
Equities declined on Thursday, with tech companies leading the drop after mixed earnings from major Wall Street firms. Rising oil prices further dampened investor sentiment. AI-linked companies remained volatile, dealing with concerns over excessive investment and profit timelines, coupled with growing debt servicing costs. A strong quarterly report from Elon Musk's SpaceX, its first since listing in June, briefly boosted all three major Wall Street indexes on Wednesday.
However, mixed after-hours releases from Meta and Tesla again unsettled investors. Tesla reported lower profits for July-September and reduced its capital spending forecast for the year, while Meta increased its AI spending estimates. Tesla's shares fell 1.3 percent at the start of trading in New York, while Meta's shares dropped 6.7 percent.
Susannah Streeter, Wealth Club's chief investment strategist, noted the return of risk-off sentiment due to high geopolitical tensions and worries about financing the AI sector. The tech-heavy Nasdaq Composite fell 1.3 percent as Wall Street's main indices moved lower. Chris Weston, head of research at Pepperstone, pointed out that markets are wary when firms increase spending but also concerned when they cut back.
Meta's numbers underscore the AI investment cycle, but funding is becoming a critical factor in investors' minds. Microsoft, Amazon, and Alphabet are scheduled to report next week, with Apple and Nvidia set to release earnings in November. European stock markets, which have fewer major tech firms, slipped in late trading. The French CAC 40 index dropped 1.0 percent due to concerns about France's high government debt and recent violent protests.
Barclays fell 0.5 percent in London after announcing plans to cut around 5,000 jobs as AI technology replaces support roles.
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