S&P 500 Falls 1.8% in Worst Session Since June as AI Concerns Mount

Key Facts

The S&P 500 fell 1.8% on Friday, October 30, its worst daily performance since June, according to the Associated Press. The decline was part of a wave of pressure on U.S. stocks, with technology shares leading losses amid concerns about the cost of the artificial intelligence boom and the timing of its returns. The Nasdaq Composite fell 2.9%, while the Dow Jones Industrial Average lost 572 points, or 1.1%, in the same session. The S&P 500 technology index also declined 4.2%, its weakest performance since early June, according to Reuters. Still, a number of S&P 500 components rose, with advancing stocks close in number to declining stocks, according to AP.

AP attributed the intensifying sell-off in technology to concerns that AI investment fever had driven stock prices to excessively high levels. Worries centered on the scale of spending needed to build the infrastructure and how long companies might take to earn returns on those investments. Amazon's plans for heavy AI spending, along with Intel's warning about cash burn, added to concerns over costs and return prospects, according to Reuters. The pressure came as technology companies also faced disappointing results and outlooks, Reuters reported. AP said concerns centered on the view that Wall Street's fever for AI technologies had "pushed prices to excessively high levels."

Intel was among the biggest losers, falling nearly 29% after the company issued an earnings outlook below analysts' expectations, according to AP. That was the stock's worst daily performance since 1974, making its decline a prominent sign of the impact of disappointing forecasts on the sell-off. The result, combined with the company's warning about cash burn, fueled concern over the cost of expanding AI infrastructure. At the same time, Amazon's spending plans raised questions among investors about how quickly large investments would turn into returns. Pressure thus focused on company valuations and expected spending, rather than on one common cause for all the assets that declined.

Losses spread to cryptocurrencies, but sources linked pressure in that market to factors different from concerns about technology stocks. Bitcoin fell below $77,000 after topping $86,000 earlier in October, according to AP. The agency linked declines in cryptocurrency companies' shares to the Binance hack, which affected more than $6 billion in crypto assets. A U.S. blockchain intelligence firm believed a North Korean unit was involved in the attack, AP reported. Coinbase shares fell 10.6%, while Strategy shares declined 7.8% on Friday, reflecting selling pressure on companies linked to the sector.

Fast Company noted that some traders on social media described the sell-off as "Bloody Friday." It said the session took place over Halloween weekend, without making the occasion an explanation for the market move. In the background to the stock session, the Federal Reserve had described inflation as still elevated and said that accumulating more information would help the committee determine appropriate policy to return it to its 2% target in a timely manner. The U.S. October jobs report is scheduled for release on November 6 at 8:30 a.m. Eastern time, according to the Bureau of Labor Statistics calendar. The data were among the releases investors had been due to follow the following week, after a session marked by notable pressure on technology stocks and cryptocurrencies.