S&P 500 Drops 1.8% as Tech Sell-Off Deepens

The S&P 500 index closed down 1.8% on Friday, marking its worst single-day performance since June.

The decline followed a broader retreat from technology stocks as investors grew concerned that artificial intelligence valuations had risen too quickly. The Nasdaq composite fell 2.9% for the day, while the Dow Jones Industrial Average lost 1.1%.

Intel Corp. led the market lower, with shares sinking almost 29% to their lowest level since 1974. The chipmaker provided a profit forecast for the final quarter of the year that missed analyst expectations. CEO Lip-Bu Tan noted that the personal computer industry continues to face pressure, despite Intel reporting stronger profits for the most recent quarter than previously anticipated.

Amazon.com Inc. shares dropped 1.9% after the company reported weaker summer profits than expected. Investors focused on the firm's free cash flow, which showed a burn of $42.4 billion over the previous 12 months. Amazon spent $94.8 billion on property and equipment, primarily to build out its artificial intelligence infrastructure. Nvidia Corp., the largest chip supplier for AI data centers, saw its stock fall 4.9%, exerting the greatest downward pressure on the S&P 500.

Joe Tigay, a portfolio manager at Equity Armor Investments, told clients in a note that the market is shifting from a phase of hope regarding AI to a phase requiring proof of productivity. He described the current sentiment as moving from dreams to a demand for results.

In the cryptocurrency sector, stocks declined following a hack on Binance, the world's largest crypto exchange. A U.S.-based intelligence firm linked the attack, which affected more than $6 billion in assets, to a North Korean unit. Coinbase Global Inc. shares fell 13.6%, and Strategy Inc., which holds about 4% of the total bitcoin supply, dropped 8.3% despite reporting strong quarterly profits.

Non-technology stocks showed more resilience as several firms reported better-than-expected earnings. ExxonMobil Inc. rose 1.8% and Chevron Corp. gained 1.7% after both oil majors beat profit estimates. Mondelez International Inc. climbed 4% following stronger growth reports, while Colgate-Palmolive Co. added 2.9% on improved revenue from higher global prices.