Futures associated with the tech-centric Nasdaq have declined significantly, indicating a continuation of substantial losses in the tech sector from the previous session, as quarterly earnings reports from Amazon and Intel have heightened worries regarding extensive expenditures on artificial intelligence. Binance has taken the step of freezing assets following the theft of billions of dollars in what is now recognised as the largest cyberattack in the cryptocurrency sector’s history.
Nasdaq futures experienced a decline on Friday. By 04:04, the Nasdaq 100 futures contract had declined by 646 points, or 2.2%, S&P 500 futures had decreased by 78 points, or 1.0%, and Dow futures had dipped by 21 points, or 0.1%. The tech-heavy Nasdaq Composite experienced a significant downturn on Thursday, falling by 1.38%, largely attributed to a substantial decline in the shares of Alphabet. The parent company of Google experienced its most significant decline to date, with a loss exceeding half a trillion dollars in market value. Investors expressed hesitation regarding the group’s strategy to engage in substantial AI investments, despite the fact that its primary search advertising segment experienced its slowest growth rate in five quarters. Software titan Microsoft also concluded the trading session with a decline. Similar to Alphabet and Meta Platforms, the company maintained its AI spending strategy and reported disappointing returns, raising concerns about the fundamental operations of the tech giants supporting the AI surge. Microsoft completed a $25 billion bond offering, marking its position as the final U.S. hyperscaler to access debt markets for financing its AI ambitions. Concerns have emerged regarding the viability of Big Tech’s strategy to finance the swift expansion of AI infrastructure through debt and equity issuance, rather than relying on their own cash flows. Notably, the correction in the AI trade has served as a boon for U.S. Treasuries, directing investors toward the relative safety of U.S. government debt.
Elsewhere, Binance has experienced the most significant cyberattack recorded in the cryptocurrency sector. The world’s largest cryptocurrency exchange reported that $6.3 billion in assets had been misappropriated by hackers, with approximately 50% of those funds being secured by stablecoin issuers like Tether and Circle. Analysts have indicated that a sophisticated hacking group referred to as TraderTraitor could be responsible for the heist, which poses a significant risk to the confidence in an industry attempting to gain mainstream acceptance. Binance has halted all withdrawals while collaborating with law enforcement to enhance its security infrastructure. The company stated that withdrawals are expected to resume by Sunday, emphasising that all losses will be compensated and asserting that “user funds are safe.” Cryptocurrency prices experienced a significant decline following the announcement. Largest crypto token Bitcoin was last down by 2.6% at $78,001.8, after having temporarily fallen below $77,000 for the first time in more than a month.
Meanwhile, a new set of significant technology earnings was dampening market sentiment. Amazon shares declined by more than 6% in premarket U.S. trading, after the company flagged slowing growth in its e-commerce and advertising units. Online store sales rose by only 2%, reminiscent of levels last seen following the reopening of shops after the COVID-19 pandemic. Advertising services, meanwhile, expanded by 11%, the slowest rate since Amazon first began separately reporting these figures in 2022. Some of the deceleration was partially explained by Amazon’s decision to shift its yearly Prime Day sales event to the second quarter from the third quarter last year. During the same period, Amazon’s cloud division, Amazon Web Services, generated $46 billion in revenue for the three months concluding in September, marking the quickest growth rate in several years. However, Amazon echoed its peers in reiterating a plan to spend around $220 billion in capital expenditures this year, while free cash flow tumbled into negative territory for the preceding 12 months.
Intel experienced a decline of over 25% in premarket trading, primarily due to weak demand for personal computer processors and disruptions in the supply chain affecting its essential data center chips. The semiconductor firm also predicted that fourth-quarter sales would be between $15 billion to $16 billion, missing average estimates of $17 billion, according to data. Projected per-share income, excluding certain items, of $0.25 fell short of expectations as well. The company has faced challenges in the PC market, grappling with difficulties in acquiring essential components. This situation has been primarily driven by a global shortage of memory chips, which has been exacerbated by the critical role these processors occupy in AI data centers. PC shipments and demand have experienced a decline as a consequence.
Elsewhere, the Bank of Japan left interest rates unchanged as expected on Friday, and revealed that it will speed up its sale of stock. The BOJ kept its overnight call rate at 1.25%, with eight of the bank’s nine-member rate-setting board voting in favor of a hold. Board member Takata Hajime stood alone in dissent, advocating for a 25 basis point increase. Analysts interpreted the statement as the BOJ proclaiming success in its prolonged battle against inflation, thereby paving the way for additional interest rate increases. The central bank announced its intention to sell approximately 860 billion yen in exchanged-traded funds annually based on book value. Source noted that it will now take 43 years to unwind all of the BOJ’s purchases of Japanese ETFs, a significant reduction from the previous timeline of 112 years.
