[New York stock market close | October 30] Nasdaq 2.86%↓… Technology stocks weaken due to sharp drop in Intel and burden of AI investment

Dow fell 1.09%, S&P 500 fell 1.82%... Philadelphia Semiconductor Index about 7.2%↓

Concerns about cash spending due to Amazon's performance falling short of expectations... Pharmaceutical, consumer staples, and telecommunication stocks rise

The three major indices of the New York Stock Exchange fell simultaneously on the 30th (local time). Technology stocks weakened as Intel's fourth quarter earnings forecast fell below market expectations and Amazon's earnings announcement highlighted the burden of cash spending due to large-scale investments. Semiconductor and data center-related companies suffered significant declines, while pharmaceutical, consumer staples, and telecommunication stocks generally rose.

On this day, the Dow Jones Industrial Average ended trading at 51,770.31, down 572.25 points (1.09%) from the previous trading day. The Standard & Poor's (S&P) 500 index closed at 7,580.07, down 140.32 points (1.82%), and the Nasdaq Composite Index closed at 25,437.00, down 747.73 points (2.86%). The Philadelphia Semiconductor Index plunged about 7.2%.

Intel's stock price plummeted about 29%. The fourth quarter sales forecast presented after the market closed the previous day was $15 billion to $16 billion, and adjusted earnings per share (EPS) was $0.25. It fell short of market expectations of $17.1 billion in sales and $0.43 in adjusted EPS.

The third quarter growth alone did not resolve concerns about future performance. Intel's quarterly sales were $16.5 billion, a 21% increase compared to the same period last year, and sales in the data center and AI division also increased by 78%. On the other hand, PC-related business sales decreased by 5%. The company predicted that the slowdown in the PC market will continue until at least the first half of next year.

In the semiconductor industry, major stocks other than Intel also fell. AMD fell 10.88% and Qualcomm fell 11.12%. Nvidia and Broadcom fell 4.22% and 5.48%, respectively, and memory company Micron also fell 5.30%.

The weakness also extended to semiconductor equipment, servers, and storage companies. Applied Materials and Lam Research fell 7.49% and 6.01%, respectively. Dell Technologies fell 10.77% and SanDisk fell 13.47%. Oracle, which is expanding its cloud infrastructure business, also fell 6.37%.

Amazon's third quarter sales and EPS fell short of market expectations, and financial burden due to AI investment was also revealed. The sales of Amazon Web Services (AWS), a cloud business, were about $46 billion, up 39% compared to the same period last year, but free cash flow for the past 12 months until the end of September recorded a net outflow of $42.4 billion. The net inflow of $14.8 billion in the same period a year ago turned negative.

Amazon explained that free cash flow decreased as expenditures for acquisition of tangible assets increased, centering on AI investment. The cash-based capital expenditure forecast for this year was maintained at approximately $220 billion. Amazon stock prices fell about 1.4% on this day.

대형 기술주도 하락했다. 마이크로소프트는 1.55%, 메타는 1.53%, 알파벳 A주는 1.40%, 애플은 1.23% 내렸다. As not only semiconductors but also software and internet platform companies showed weakness, the decline in Nasdaq, which has a high proportion of technology stocks, was relatively large.

Outside of technology stocks, differences by industry were clear. Among pharmaceutical stocks, Eli Lilly continued its strong performance the previous day and rose 3.19%, Merck rose 2.18%, and Pfizer rose 1.90%. In consumer staples, Walmart rose 1.86%, Costco rose 1.63%, and PepsiCo rose 2.65%.

In telecommunication stocks, T-Mobile, which announced third-quarter earnings that exceeded market expectations on the 28th and raised its annual cash flow forecast, rose 6.21% on the day. Verizon also rose 2.45%.

Energy stocks ExxonMobil and Chevron rose 2.16% and 1.75%, respectively, as their third-quarter profits exceeded market expectations. On the other hand, in financial stocks, JP Morgan Chase fell 1.90%, Bank of America fell 2.21%, and Goldman Sachs fell 3.58%.

In the bond market, preference for safe assets has strengthened, and US Treasury bond prices have risen. Based on Tradeweb statistics, the 10-year maturity government bond interest rate closed at 4.928% per annum, about 0.06 percentage points lower than the previous trading day.

On a weekly basis, the Dow fell about 0.9%, the S&P 500 fell 0.6%, and the Nasdaq fell 2.0%. In October as a whole, the Nasdaq fell 5.3%, recording the largest monthly drop since March of last year. The S&P 500 fell 0.9%, but the Dow rose 1.7%.