NEW YORK: The tech-heavy Nasdaq slid more than 2 percent on Thursday as growth stocks weakened after earnings from mega-caps Tesla and Meta did little to address AI-related concerns, with a recovery in oil prices further adding to market unease.
Meta slipped 5.2 percent after the social media giant unveiled a new class of non-voting shares to help fund its costly AI expansion. The decline came despite stronger-than-expected quarterly revenue and an upbeat fourth-quarter sales forecast.
The market weakness marked a sharp reversal from Wednesday, when robust results from SpaceX and Super Micro sparked an AI-fueled rally. The optimism faded as investors shifted their focus from earnings strength to the enormous capital required to build AI infrastructure and their uncertain return timeline.
The selloff put the Philadelphia SE Semiconductor Index on track to shed more than USD616 billion in market value, while the Nasdaq-100 was set to erase nearly USD1 trillion. The semiconductor index fell 5.6 percent to its lowest since July 29.
“Semiconductors and the Nasdaq have been elevated to a huge degree by investors’ rush to participate in the AI build-out. Investors are now reassessing the pace of AI spending and the returns that spending can generate,” said Steve Sosnick, chief market analyst at Interactive Brokers.
Tesla fell 0.7 percent after the electric-vehicle maker cut annual capital expenditure forecast, raising questions about the pace of its AI and robotics ambitions.
Other constituents of the ‘Magnificent 7’ group also declined, with Amazon.com and Nvidia down more than 3 percent each.
At 11:58 a.m. ET, the Dow Jones Industrial Average fell 29.18 points, or 0.06 percent, to 52,826.91. The S&P 500 lost 85.27 points, or 1.10 percent, to 7,671.90, while the Nasdaq Composite slipped 551.50 points, or 2.06 percent, to 26,152.90.
Six of the 11 S&P 500 sectors posted losses, led by technology, down more than 2.7 percent.
Consumer staples were leading the gains with a 2.5 percent rise. Procter & Gamble jumped 6.1 percent to a near eight-month high after the consumer goods giant beat first-quarter estimates.
The S&P 500 value index was flat compared to a 2.2 percent drop in its growth counterpart.