-
Stock prices fell sharply on Thursday, dragged down by technology.
-
Shares of Microsoft and Meta fell on renewed concerns about AI spending.
-
Unemployment claims fell more than expected, while the Fed’s preferred inflation gauge moved closer to 2%.
US stocks fell sharply on Thursday, with the tech-heavy Nasdaq down nearly 3%, as Meta and Microsoft faced steep losses.
The technology sell-off was fueled by the latest profits from mega-cap companies that largely beat expectations but disappointed investors in other areas and exacerbated concerns about heavy investment in artificial intelligence.
The S&P 500 fell almost 2%, while the Dow Jones Industrial Average lost more than 370 points.
Here’s where the US indexes stood at 4pm on Thursday:
Much of the disappointment came from the guidance from the tech giants.
Microsoft said it expects current quarter revenue to be between $68.1 billion and $69.1 billion, while analysts polled by FactSet expected $69.89 billion. The company attributed the slowdown in part to its investments in cloud computing capacity for AI demand.
Microsoft shares fell 6% to close at $406.35.
Meta, meanwhile, said it expects an increase in capital expenditures in the coming year as it continues to spend on AI, and raised its investment forecast for this year to a range of $38 billion to $40 billion, from $37 billion to $40 billion.
However, UBS analysts remain positive that the higher spending will pay off.
“While Meta continues to signal a significant increase in capital expenditures for 2025, the results also highlight multiple offsets to illustrate what the investments will deliver – as we indicated previously, the easiest item to observe is the absolute increase in revenue “2024 dollar growth is currently about $28 billion and nearly matches the pandemic-induced acceleration of $29 billion from 2021,” the analysts wrote in a Thursday note.
Shares of Meta lost 4% to close at %567.68.
Also on Thursday, investors consumed the Federal Reserve’s favorite inflation gauge. The personal consumption expenditure index cooled to 2.1% annually in September from 2.2% in August, but the core index – which excludes volatile food and energy prices – came in higher than forecast at 2.7%.
Unemployment claims, meanwhile, fell by more than expected to 216,000 last week, down 12,000 from the previous week. Economists had expected 230,000 claims.
