Stocks fall on concerns over AI cash burn while bonds rebound with oil

By Sinéad Carew and Iain Withers

NEW YORK/LONDON, Oct 30 (Reuters) – A sharp decline in technology stocks on Wall Street pushed the MSCI world index down 1.5% on Friday, sending investors back to the safety of U.S. bonds on concerns that large, cash-intensive investments in AI may not generate sufficient returns.

Stocks in chipmaker Intel < INTC.O> plunged 28.6% and Amazon shares lost 1.4% after their results showed they had spent money while investing heavily in AI-related development. Intel also said PC demand has slowed and could persist into next year.

Shares of Google parent Alphabet lost another 1.4%, after sliding 12.6% on Thursday, after it announced that massive spending on AI had turned the company’s cash flow negative.

“We’ve seen a huge rise across the complex,” said Sahak Manuelian, managing director of global equity sales and trading at Wedbush Securities, referring to AI-related stocks. “When you have parabolic type moves, it creates a very nasty downdraft. I think that’s what we’re seeing. And then you have people starting to pull money out and go into other areas.”

Earlier, Gene Goldman, chief investment officer at Cetera, described Friday’s stock trading as a “horror show,” with AI spending the villains, while cash burn and increased investment prompted questions about whether AI returns would “justify the spending.”

Goldman also said pressure from rising oil prices from more attacks in the Middle East and concerns about a hack of Binance, the world’s largest cryptocurrency exchange, added to the gloom. Bitcoin and other cryptocurrencies fell.

The Dow Jones Industrial Average fell 572.25 points, or 1.09%, to 51,770.31, the S&P 500 fell 140.32 points, or 1.82%, to 7,580.07 and the Nasdaq Composite fell 747.73 points, or 2.86%, to 25,437.00.

MSCI’s index of world stocks fell 17.15 points, or 1.51 percent, to 1,115.47. Earlier, the pan-European STOXX 600 index ended down 0.36%.

On Wall Street, Intel’s selloff has spread across the entire chip sector. The PHLX semiconductor index ended down more than 7% after hitting its lowest level since May, marking its biggest daily decline since late June. The S&P 500 technology index lost 4.2% on its weakest day since early June.

Investors looking for safer bets have pushed consumer staples and utilities higher. But the best performing sector of the day was energy, supported by the recovery in oil and the results of Exxon Mobil and Chevron. Oil majors posted strong profits thanks to large refining margins due to supply disruptions due to Ukrainian attacks on Russian refineries and the war in Iran.

In currencies, the yen was headed for its third straight daily gain against the dollar on Friday after the Bank of Japan kept rates steady but revised upward its inflation forecasts, while a fresh round of selling in AI stocks sparked demand for safe havens other than the dollar.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.04% to 101.92, with the euro down 0.13% to $1.1163.

Against the Japanese yen, the dollar weakened 0.1% to 157.54.

In cryptocurrencies, bitcoin fell 2.49% to $76,877.30. Ethereum fell 1.01% to $2,236.76.

U.S. Treasuries rose and the benchmark 10-year yield eyed its biggest monthly decline in nearly three years as a selloff in technology-related stocks pushed investors toward the safe-haven asset.

The U.S. benchmark 10-year bond yield fell 5.8 basis points to 4.931% while the 30-year bond yield fell 1.97 basis points to 5.3093%.

The yield on the 2-year bond, which typically moves in line with the Federal Reserve’s interest rate expectations, fell 6.64 basis points to 4.59%.

Oil prices stabilized at a six-month high as traders braced for a possible escalation of the war in Iran following Tuesday’s U.S. midterm elections. The war has lasted for eight months without a solution. An oil tanker was attacked in the Strait of Hormuz on Friday, highlighting continued supply risks. (OR)

U.S. crude rose 2.08%, or $2.12, to $104.12 a barrel. Brent crude finished at $117.63 per barrel, up 2.4%, or $2.76 per barrel, on the day.

Precious metals fell. Gold fell to a one-year low on Friday and silver fell below $50 an ounce for the first time since November 2025, as rising energy prices and lingering inflation concerns reinforced expectations that U.S. interest rates will remain high.

Spot gold fell 3.63% to $3,874.58 an ounce and spot silver fell 6.36% to $49.06 an ounce.

(Reporting by Sinéad Carew in New York, Iain Withers in London and Tom Westbrook and Ankur Banerjee in Singapore; editing by ​Tom Hogue, Clarence Fernandez, Stephen Coates, William Maclean, Chizu Nomiyama, Will Dunham and David Gaffen)