Stocks Slump as Wall Street Gets AI Wake-Up Call: Markets Wrap
(Bloomberg) — Wall Street got a reality check as a bruising selloff in technology shares fueled concern the artificial-intelligence frenzy that has powered the equity bull market might be overblown.
Disappointing tech results spurred the worst drop for stocks since June, with the Nasdaq 100 sinking 3.5% and briefly crossing the threshold of a technical correction. Intel Corp. slid the most in over four decades. The S&P 500 fell 1.8%, breaching its 100-day moving average.
S&P Global Ratings took an early step toward potentially downgrading Meta Platforms Inc.’s credit rating within the next two years, amid growing pressure on its balance sheet stemming from elevated spending tied to AI.
Apple Inc. reclaimed the title of world’s most valuable company, taking the mantle from Nvidia Corp. as investors seek the perceived safety of the iPhone maker amid concerns about AI spending.
The core businesses of America’s tech giants — the advertising, consumer and retail machines propping up a collective $750 billion in AI spending this year — are starting to show signs of slowing.
“The revelation that these hyperscalers are seeing a slowdown in their core businesses means that the big payoff that everyone has been saying will come eventually is getting pushed even further down the road,” said Matt Maley at Miller Tabak.
While AI demand remains robust, there’s a rising risk of mid-cycle capital expenditures indigestion, according to Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.
“We continue to see scope for equity gains overall and believe investors should focus on building a resilient portfolio that includes exposure beyond tech,” she said.
Looking ahead, Maley noted that the biggest problem investors will face is that the rotation that has held up the US stock market could easily disappear.
“If the major averages begin to drop in a more compelling manner, it is very likely that investors will stop rotating into other sectors and start rotating into cash,” he said.
Elsewhere, a burst of selling hit crypto as Binance revealed a record hack that renewed questions about the security of customer assets. Higher oil prices added to anxiety amid speculation the US may resume strikes against Iran. While Treasuries barely budged Friday, they saw a solid month.
Corporate Highlights:
Amazon.com Inc. has set up supplier financing arrangements to borrow as much as $80 billion against the value of hardware it buys, the company’s latest move to preserve financial flexibility as it spends hundreds of billions on artificial intelligence infrastructure. Alphabet Inc.’s Google is in talks with the US Defense Department to work on a new data security effort underpinning the $185 billion Golden Dome missile defense program, according to people familiar with the matter. ExxonMobil Holdings Corp. and Chevron Corp. beat profit expectations as conflicts in the Persian Gulf and Russia roiled energy markets, driving refining results to record highs. Starbucks Corp. Chief Executive Officer Brian Niccol said building a multi-brand company is a possibility, two weeks after the chain shut down rumors that it was exploring a takeover of Chipotle Mexican Grill Inc. Some of the main moves in markets:
Stocks
The S&P 500 fell 1.8% as of 4 p.m. New York time The Nasdaq 100 fell 3.5% The Dow Jones Industrial Average fell 1.1% The MSCI World Index fell 1.5% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro was little changed at $1.1169 The British pound rose 0.1% to $1.3396 The Japanese yen rose 0.1% to 157.52 per dollar Cryptocurrencies
Bitcoin fell 2.5% to $76,813.65 Ether fell 0.9% to $2,236.76 Bonds
The yield on 10-year Treasuries declined one basis point to 4.92% Germany’s 10-year yield declined three basis points to 3.32% Britain’s 10-year yield declined one basis point to 5.28% Commodities
West Texas Intermediate crude rose 0.9% to $102.94 a barrel Spot gold fell 3.3% to $3,886.81 an ounce ©2026 Bloomberg L.P.
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