US futures
Dow futures 0.14%, S&P 500 futures 1% & Nasdaq futures -2.5%
European futures
FTSE 0.25%, DAX 0.63%
- US stocks are set for a mixed open
- Tech stocks tank amid more concerns over the AI trade
- Amazon and Intel tumble after earnings
- Oil prices jump to 6-month highs
U.S. Stocks: Tech Sell-Off Deepens as AI Spending Fears Hit Markets
U.S. stocks are heading for a mixed open, with the Dow Jones rising while the S&P 500 and Nasdaq are falling sharply, led lower by tech.
The Nasdaq is on track to open 1.4% lower, extending losses as disappointing earnings from Amazon and Intel add to the rout in tech stocks from the previous session.
The tech-heavy Nasdaq fell sharply on Thursday, declining by 1.3% due to a deep slide in shares of Alphabet. The Google parent stock saw its worst day ever, losing more than $500 billion in market value as investors grew nervous over the group's plans to pursue heavy AI investments, even as its key advertising search unit grew at the slowest rate in five quarters.
Microsoft also ended lower yesterday, as concerns over its AI spending strategy remain and returns have underwhelmed, fuelling concerns over its core business.
Amazon and Intel have added to these worries, fuelling a global sell-off in tech stocks.
A combination of deteriorating cash flows and rising capital commitments means investors are increasingly questioning whether AI returns can justify the scale of investment.
The sell-off in tech is fuelling a rotation into safe-haven Treasuries, pulling yields lower.
The U.S. economic calendar is quiet today. Data yesterday showed that U.S. core PCE rose to 3.1% in September year-on-year, up from 3.0% in August.
U.S. GDP data yesterday also showed strong growth of 3.4% annualised in Q3, above expectations and up from 2.2%.
However, the market has slightly reined in Fed rate hike expectations to 74%. The Fed left rates unchanged this week, in line with expectations.
Corporate movers
Amazon is falling 7% after reporting negative free cash flow for the second straight quarter. Amazon reported a Q3 miss on both the top and bottom lines, while maintaining its capital expenditure forecast for 2026 at $220 billion. The tech giant posted EPS of $1.89 versus $1.96 estimated, on revenue of $201.94 billion versus $202.31 billion estimated. Amazon Web Services revenue came in ahead of forecasts, but advertising revenue missed, at $19.64 billion versus $20.89 billion expected.
Intel also issued weaker-than-expected guidance amid ongoing softness in the PC market. The share price has tanked 25% ahead of the open. Shares in Intel have rocketed this year but sold off in October amid concerns surrounding the AI buildout. The firm posted EPS of 52 cents versus 40 cents expected, on revenue of $16.51 billion, ahead of the $16.5 billion expected. However, revenue in its Computing and Physical AI group fell 5% from the same quarter a year ago, even as data centre and AI revenue jumped.
Chip stocks, including Micron, Nvidia and ARM, are trading lower pre-market.
Binance is set for a lower open after a $6.3 billion hack, which appears to be linked to a North Korean state-sponsored group. Finance said it would cover all the losses and temporarily suspended deposits and withdrawals while investigating. Bitcoin has plunged to $77K.
Nasdaq 100 forecast – technical analysis
After running into resistance at 31,365, the Nasdaq has trended lower, breaking below the 50 EMA. The price is attempting to break below the key 29,000 support zone. This has been an important support zone over the past six months.
Sellers need to break below this level to bring 28,200 into focus, the 200 EMA and also the June low.
A recovery back above the 29,000 level will see buyers turning their attention to the 50 EMA. Buyers will need to rise above the 50 EMA and 30,200, the rising trend line, in order to turn attention to 31,000, the round number, and 31,365 for fresh record highs.
FX markets – USD rises, GBP/USD falls
The U.S. dollar is falling as it tracks tech stocks lower. The U.S. is at the heart of the AI trade, and the strength of the economy is highly dependent on it. This means the U.S. dollar is vulnerable when AI doubts rise. These concerns are overshadowing a stronger-than-expected rise in U.S. core PCE and stronger-than-expected GDP data yesterday.
EUR/USD is rising against a weaker U.S. dollar following the ECB rate decision yesterday, when the central bank left interest rates unchanged, with a deposit rate at 2.5%. The market is still pricing in an 84% probability of a rate hike in December. Data today showed Eurozone GDP came in stronger than expected at 0.4% quarter-on-quarter, down from 0.6% in Q2 but ahead of the 0.2% forecast. German inflation data is due shortly and is expected to show CPI easing to 0.1% month-on-month in October, down from 0.6% in September.
GBP/USD is rising amid a weaker U.S. dollar. The pound is extending gains for a third session after the UK Budget this week, which has helped soothe the gilt market. Attention is now turning to the Bank of England rate decision next week, where the central bank is expected to hike rates by 25 basis points.
Oil jumps to a six month high
Oil prices are rising on Friday and are on track for a fourth straight monthly gain as traders fret over a potential escalation of the U.S.-Iran conflict following the U.S. midterm elections.
Brent trades up 2.4% at a six-month high, while WTI heads 2% higher towards $105.
Brent is set to rise 14% this month, while WTI is heading for a 15% jump.
Fears of an escalation of hostilities between the U.S. and Iran are fuelling gains, together with ongoing attacks on tankers in the Strait of Hormuz and attacks by Yemen-backed Houthis in Saudi Arabia.
Recent mediation attempts by Qatar appear to have made little progress, although mediators are in Tehran on Friday as part of a coordinated effort to reach a deal.
Oil prices could become more volatile in the coming weeks due to Israel's parliamentary elections as well as the U.S. midterms.
OPEC is expected to leave output unchanged this weekend.
