Wall Street falls as tech sell-off deepens on AI concerns

Wall Street Tech Sell-Off Deepens on AI Spending Concerns

Global markets closed the week under heavy pressure as investors dumped technology stocks amid mounting questions over the financial returns on artificial intelligence investments. Wall Street indices fell sharply, led by a 2.9% drop in the Nasdaq composite.

The broader S&P 500 tumbled 1.8% for its worst single session since June, marking its third straight losing week. The Dow Jones Industrial Average dropped 572 points, or 1.1%, closing at 51,770.

Market anxiety intensified following reports from major technology firms. Amazon reported negative free cash flow following heavy capital expenditures directed toward artificial intelligence infrastructure.

It is fair to say that this week, not just today, has been very much about the future of AI and what that is going to look like, whether there will be a positive return on investment and if so, how quickly, Wealthspire Advisors Oliver Pursche told Reuters.

Server makers Dell and HP dropped 10.8% and 9.6% respectively. Alphabet shares also suffered a record decline earlier in the week after telling investors it burned through more cash during the summer than the spring.

Australian Markets Brace for Local Economic Pressures

Australian sharemarket futures pointed toward a slide of 4 points at the open. S&P/ASX 200 futures were down 0.1% at 7am AEDT Monday, ahead of the Reserve Bank of Australia meeting. While Wall Street reacted intensely to cash-burning artificial intelligence expenditures, the tech-lite ASX remained comparatively insulated.

Sector performance diverged significantly across the Australian exchange. Materials shares outperformed, rising 4.06% for the week as major miners including BHP Group and Rio Tinto recovered from prior losses. On Tuesday, consumer staples retreated 5.13% and consumer discretionary equities declined 2.35% as inflation figures came in higher than anticipated, causing traders to price in an 80% probability of a fifth interest rate hike for 2026.

Safe Haven Assets Diverge as Oil Prices Climb

Precious metals failed to attract safe-haven capital during the correction. Gold prices slumped 3.5% to a one-year low, while silver dropped 6.5% and palladium declined 3.0%. The sky is falling, independent metals trader Tai Wong told Reuters. Metals will not be able to escape the gravity well of a nasty stock correction.

Following the conflict with Iran that pushed up both oil quotes and inflation, crude prices continued to push higher despite overall market weakness, maintaining a position close to the upper boundary of their recent range.

More on this story: US Tech Stocks Tumble Amid AI Spending and Earnings Concerns · Wall Street closes lower over AI costs, earnings and Fed meeting

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