Wall Street has its worst day since June as Intel plunges 29% on PC slump

US stocks had their worst day since June on Friday, October 30, as a sell-off in technology shares deepened. Intel lost almost 29% of its value, its steepest one-day fall since 1974, after warning that a slump in personal-computer sales would cut its revenue and profit this quarter.

The S&P 500 fell 1.8% and the tech-heavy Nasdaq Composite dropped 2.9%, according to the Associated Press. The Dow Jones Industrial Average lost 1.1%. The fall came a day after Alphabet suffered the worst day in its history, and it adds to growing doubts among investors about whether the hundreds of billions of dollars that technology companies are spending on artificial intelligence will pay off.

What happened

According to closing figures published by TheStreet, the S&P 500 ended at 7,578.97, down 1.83%. The Nasdaq closed at 25,442.31, down 2.84%, and the Dow at 51,785.82, down 1.06%. The Russell 2000 index of smaller companies fell 2.03%. TheStreet reported that nearly 70% of US-listed stocks fell and that the S&P 500's technology sector dropped nearly 5%.

Intel led the losses. The chipmaker reported third-quarter results on Thursday evening that beat analysts' estimates: revenue of $16.5 billion and adjusted earnings of 52 cents a share, according to its release as summarised by StockTitan. But it forecast fourth-quarter revenue of $15 billion to $16 billion and adjusted earnings of about 25 cents a share. Analysts surveyed by LSEG had expected about $17.1 billion and 43 cents.

Chief executive Lip-Bu Tan said the personal-computer industry "continues to feel pressure", the AP reported. Chief financial officer David Zinsner said in the release that the company expected the PC slowdown to continue "at least through the first half of next year". Intel said revenue from its client computing business, which makes PC chips, fell 5% from a year earlier, while data centre and AI revenue rose 78%.

According to Benzinga, the fall was Intel's steepest since July 1974, worse than its 26% drop in August 2024, which had been its worst session in five decades. Bank of America analyst Vivek Arya cut his rating on the stock to neutral from buy and lowered his price target to $100 from $145, Benzinga reported.

Other chip stocks fell with Intel. Nvidia dropped 4.9%, and because of its size it pulled the S&P 500 down more than any other company, even Intel, the AP said. Benzinga reported that AMD fell 9.3% and the VanEck Semiconductor ETF 5.9% during morning trading.

The sell-off went well beyond chips. Reddit fell about 29% after giving a weaker-than-expected revenue forecast for the final quarter, according to TheStreet. Amazon fell about 2% after reporting a smaller profit than analysts had expected; the AP said Amazon burned through $42.4 billion of cash over the past 12 months while spending $94.8 billion on property and equipment, mostly for AI.

"Strong AI demand is no longer enough on its own." Daniela Hathorn, Capital.com

Background

For much of the past two years, US stock indexes have been driven by a small group of large technology companies betting heavily on AI. Investors have rewarded them for building data centres and buying chips. That mood has been turning this month.

On Thursday, Alphabet, Google's parent company, fell more than 12% in its worst day on record after telling investors it had burned through more cash in the summer than in the spring, the AP reported. TheStreet said Alphabet was down 12.61% for the week.

"We're moving out of the hopes and dreams phase of the AI trade," Joe Tigay, a portfolio manager at Equity Armor Investments, told the AP. Daniela Hathorn, senior market analyst at Capital.com, told TheStreet that Alphabet's fall showed growing concern about how much cash AI is costing.

The AP also said chip stocks and other winners of the data-centre boom had come under pressure on concerns that high interest rates could slow construction of new data centres. The US Federal Reserve kept its benchmark rate at 3.75% to 4% on Wednesday, and two officials voted for an increase.

Other markets

Not everything fell. Oil companies rose as crude prices climbed: Brent crude, the international benchmark, gained 2.4% to $113.43 a barrel, the AP reported, near the top of its range since the war with Iran pushed prices up. TheStreet linked Friday's rise in oil to attacks on tankers in the Strait of Hormuz. ExxonMobil gained 1.8% and Chevron 1.7%. Nearly as many stocks in the S&P 500 rose as fell, the AP said.

Investors bought US government bonds as a safer place for their money. The yield on the 10-year Treasury fell to 4.93% from 4.98% late on Thursday, the AP said. It had been above 5.30% earlier this month.

Cryptocurrencies also fell. Bitcoin dropped below $77,000, down from more than $86,000 earlier this month, after this week's hack of more than $6 billion in crypto at Binance, the world's largest exchange, the AP reported. Shares of Coinbase, a US crypto exchange, fell 13.6%.

In Asia, South Korea's Kospi fell 3.5% and Japan's Nikkei 225 dropped 2.1%, while Hong Kong's Hang Seng rose 1.5%. A measure of expected US stock-market swings, the Cboe Volatility Index, jumped more than 32% during the day to 22.75, near the highs it last reached in June, according to TheStreet.

Key numbers

Intel: down almost 29%, its worst day since 1974

Nasdaq Composite: down 2.9%, to 25,442.31

S&P 500: down 1.8%, to 7,578.97, its worst day since June

Brent crude: up 2.4%, to $113.43 a barrel

10-year US Treasury yield: 4.93%, down from 4.98%

What happens next

Indian markets were closed for the weekend when the sell-off took place. The Sensex and Nifty, which rose on Friday led by IT and pharmaceutical shares, will open on Monday, November 2, the first session to reflect Wall Street's fall.

In the United States, attention turns to the midterm elections on Tuesday, November 3, and to whether more technology companies follow Intel and Alphabet in warning investors about costs and demand. Intel has said it expects the PC slowdown to last at least until the middle of next year.