Wall Street tumbles as tech and chip stocks plunge; AMD, Nvidia, Intel, Alphabet, SpaceX extend losses up to 12%

The Wall Street indices opened on a mixed note on Thursday, extending Wednesday’s gains. The Dow Jones and the S&P 500 pared their opening gains to trade in red within first hour itself, while the NASDAQ 100 extended extended the losses by plunging over 600 points or 2%.

After a bumper session on Wednesday, driven by complete sweep by Democrats in the US mid-term elections, the US equities rallied on Thursday due to external and internal tailwinds. The crude oil prices fell to two-month lows on Thursday as traders expect Democrats to alter decision making of President Trump on war with Iran. Brent crude oil prices fell below $93 per barrel and the WTI crude oil prices hovered below $90 per barrel.

Falling crude oil prices helped bolstered the investor sentiment as inflation worries abate. Coupled with this, the Treasury yields also declined further on Thursday reducing rate hike expectations.

At the stock specific level, the consumer, retail and financial services stocks were the top gainers on Wednesday, which further extended their gains on Thursday. Reports indicate that Democrats are expected to slowdown the AI-spending spree and increase the scrutiny of trillion dollar investments planned.

Consequently, the Philadelphia Semiconductor Index (SOX) plunged 3% on Wednesday and extended its fall on Thursday as well. Shares of Advanced Micro Devices (-11%), Qualcomm (-9.7%), Marvell Technology (-8.1%), Micron Technology (-7.9), Intel Corporation (-6.5%), Broadcom (-4.7%), Nvidia Corporation (-4.06%) were among the major losers from the index.

At the same time, the NASDAQ 100 index plunged 1.2% on Thursday amid persistent selloff in the tech stocks. Among the megacaps, Apple Inc (+1%), Amazon Inc (+0.1%) were the two gainers, while Nvidia, Alphabet, Meta Platforms Amazon, Microsoft, Tesla and SpaceX plunged as much as 6% on Thursday, extending the losses from Wednesday.

On the flipside, Walmart Inc. (+1.15), Procter & Gamble Company (+1.3%), American Express (+1.05), Merck & Company (+1%) were the top gainers and Home Depot, Coca Cola Company, Amgen, JP Morgan Chase & Co also gained up to 1%. Investors preferred booking profits in the overvalued AI stocks and rotate it towards defensive bets in the consumer, retail, pharma and financial services stocks.

Investor apprehensions grew over AI stocks after the latest quarterly results showed that AI Hyperscalers are yet to produce meaningful outcome from the AI investments. Meanwhile, Alphabet, Amazon posted negative free cash flow with increasing debt levels, further signalling weakness in the financials, despite steady growth in the topline.