[New York Stock Market] Nasdaq Plunges 2.6% on AI Investment Concerns

International oil prices surge after attack on Saudi Arabia

Wall Street's three major indexes closed mixed on Thursday, October 22. The S&P 500 and Nasdaq fell sharply as concerns resurfaced over the investment burden on artificial intelligence (AI)-related companies.

The Dow Jones Industrial Average closed up 11.89 points, or 0.02%, from the previous trading session at 52,867.98. The large-cap S&P 500 fell 93.74 points, or 1.21%, to 7,663.43, while the tech-heavy Nasdaq Composite dropped 693.99 points, or 2.60%, to 26,008.85.

The New York Stock Exchange. New York, U.S. - Correspondent Hwang Yoonjoo

Technology and memory stocks came under pressure amid concerns over massive investments by AI companies. Meta fell 6.98% despite reporting third-quarter revenue above market expectations in its earnings release the previous day. Losses were particularly steep for AMD, down 8.10%; Nvidia, down 4.40%; Micron Technology, down 6.26%; SK hynix ADR, down 8.07%; and CoreWeave, down 10.06%.

Nvidia CEO Jensen Huang's remarks also stoked unease. In an interview with CNBC, Huang said demand for neocloud services was "off the charts," but added that a lack of working capital was holding back the industry's growth.

Wells Fargo traders said concerns about financing conditions were weighing on the market. They also noted that Meta's statement that it needed funding for massive AI investments had put pressure on its stock and the broader market.

James McCann of U.S. financial services firm Edward Jones said that after technology stocks' extraordinary rally, the market was now demanding stronger evidence that AI investments would pay off. He added that investors were also concerned about whether massive capital spending could be sustained while interest rates remained high.

"We remain positive on large-cap stocks," he said, "but investors should ensure their portfolios are sufficiently diversified."

International oil prices surged as Yemen's Houthi rebels attacked Saudi Arabia, heightening concerns about disruptions to crude oil supplies in the Middle East. Houthi military spokesperson Yahya Saree said in a statement that the group had "carried out a total of four major military operations deep inside Saudi territory over the past 48 hours, using ballistic missiles and drones."

West Texas Intermediate (WTI) crude for December delivery settled up 2.39% at $99.47 a barrel on the New York Mercantile Exchange. Brent crude futures for December delivery settled up 4.00% at $113.17 a barrel on the Intercontinental Exchange. This was the highest level since May.

Gold fell to its lowest level in more than two weeks amid inflation concerns stemming from higher oil prices and expectations of interest rate hikes. Gold is considered a hedge against inflation, but rising interest rates make the non-interest-bearing metal less attractive as an investment.

Meanwhile, markets expect the Federal Reserve (Fed) to hold its benchmark interest rate at next week's meeting, while pricing in about an 80% chance of a 0.25-percentage-point rate hike in December. The personal consumption expenditures (PCE) price index, due on October 29, is also expected to be a key factor in the outlook for interest rates.

This content was produced with the assistance of AI translation services.