NEW YORK/LONDON - A sharp selloff in Wall Street's tech shares pushed MSCI's global index down 1.5 per cent on Friday (Oct 30), sending investors to the safety of US bonds on fears that hefty cash-burning AI investments may not deliver sufficient returns.

Shares in chipmaker Intel plunged 28.6 per cent and Amazon shares lost 1.4 per cent after their results each showed that they burned through cash while investing heavily in AI-related development. Intel also said PC demand had slowed, and that it could persist through next year.

Shares in Google parent Alphabet lost another 1.4 per cent, having slid 12.6 per cent on Thursday, after it reported that massive AI spending turned the company's cash flow negative.

"We've had such a huge move up in the whole complex," said Sahak Manuelian, managing director for global equities sales and trading at Wedbush Securities, referring to AI-related stocks. "When you've had the parabolic-like moves, it makes for a very nasty downdraft. I think that's what we're seeing. And then you have people that are starting to pull money out and going to other areas."

Earlier, Gene Goldman, chief investment officer at Cetera, described Friday's stock trading as a "horror show" with AI spending being the villain as cash burn and elevated capex prompted questions about whether the AI returns will "justify the outlays."

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

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

MSCI's gauge of stocks across the globe fell 17.15 points, or 1.51 per cent, to 1,115.47. Earlier, the pan-European STOXX 600 index finished down 0.36 per cent.

On Wall Street, Intel's selloff spread across the chip sector. The PHLX semiconductor index finished down more than seven per cent after touching its lowest level since May, marking its biggest daily drop since late June. The S&P 500 technology index lost 4.2 per cent in its weakest day since early June.

Investors looking for safer bets pushed up consumer staples and utilities. But the top performer on the day was energy, which was bolstered by oil's rally and results from Exxon Mobil and Chevron. The oil majors posted strong profits due to big refining margins driven by supply disruptions from Ukrainian attacks on Russian refineries and the Iran war.

[[nid:749444]]

In currencies, the yen was headed for its third consecutive daily gain against the dollar on Friday after the Bank of Japan held rates steady but revised up its inflation forecast, while a fresh wave of selling in AI shares triggered demand for non-dollar safe havens.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.04 per cent to 101.92, with the euro down 0.13 per cent at US$1.1163 (S$1.43).

Against the Japanese yen, the dollar weakened 0.1 per cent to 157.54.

In cryptocurrencies, bitcoin fell 2.49 per cent to US$76,877.30. Ethereum declined 1.01 per cent to US$2,236.76.

US Treasuries rose and the benchmark 10-year yield was eyeing its biggest monthly drop in nearly three years as the selloff in technology-related stocks pushed investors into the safe-haven asset.

The yield on benchmark US 10-year notes fell 5.8 basis points to 4.931 per cent while the 30-year bond yield fell 1.97 basis points to 5.3093 per cent.

The two-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 6.64 basis points to 4.59 per cent.

Oil prices settled at six-month highs as traders braced for a potential escalation in the Iran war after the US midterm elections on Tuesday. The war has lingered for eight months without a resolution. On Friday, a tanker in the Strait of Hormuz was attacked, highlighting the ongoing supply risks.

US crude settled up 2.08 per cent, or US$2.12, to US$104.12 a barrel. Brent finished at US$117.63 per barrel, up 2.4 per cent, or US$2.76 a barrel, on the day.

Precious metals fell. Gold dropped to a one-year low on Friday and silver slid below US$50 an ounce for the first time since November 2025, as higher energy prices and persistent inflation concerns strengthened expectations that US interest rates will stay high.

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

[[nid:749532]]