Amazon and Intel deepen AI-spending sell-off; Nasdaq 100 futures down 2.65%

• US: Futures are the only live read on the day, and they point to a second down session led by tech. Nasdaq 100 futures are 2.65% lower and S&P 500 futures are down 1.12% at 7,667.5. In Thursday's cash session the S&P 500 ended 0.3% lower at 7,720.39, the Nasdaq Composite fell 1.38% and the Dow closed down 0.25%.
• Europe is split mid-session. The Euro Stoxx 50 is down 0.95% and the DAX 0.69%, while the FTSE 100 is 0.25% higher at 10,748.62 and the CAC 40 is flat, up 0.07%.
• Asia closed sharply lower in the tech-heavy markets: the Kospi fell 3.48%, Taiwan 2.49%, the Nikkei 2.12% and Shanghai 1.44%. Hong Kong went the other way, with the Hang Seng finishing 1.46% higher.

Investors are questioning Big Tech's AI spending for a second day. Alphabet closed Thursday 12.64% lower after weak search and advertising sales revived fears that AI is eating into Google's core business. ServiceNow fell 26.95% and Fortinet 20.09% on disappointing results. The selling spread overnight. Amazon is sharply lower pre-market: capital spending above $77bn left it with a free cash outflow of $42.4bn, and online sales grew just 2%. Intel has fallen harder still on a weak fourth-quarter forecast, and its chief executive warned that memory pricing will stay a severe industry-wide problem into 2027. The common question is whether the spending can pay back fast enough to justify the valuations. That is why chipmakers and Asia's tech-heavy markets are taking the brunt.

Oil is a second source of pressure. Tension around the Strait of Hormuz keeps the Iran war in focus, and with Brent at $113.40 and WTI at $104.21, inflation risk has not gone away. The same prices are a windfall for the oil majors, which reported strong refining profits this morning.

Bonds are cushioning the fall. The 10-year Treasury yield is down 5.4bp at 4.935% and the 5-year is down 6.5bp, a move towards safety. Lower long yields usually help growth stocks, because their profits lie further in the future and are worth more when rates fall. So far that has not stopped the tech selling.

This looks like a scare specific to equities, not a wider rush for safety. The VIX is up 1.4 points at 18.6, which is elevated but not panicked. The MOVE index of bond volatility ended Thursday lower at 93.5. Under Thursday's falling US indices, PrimerIQ's breadth count across our listed universe showed 3,592 advancers against 2,470 decliners. Health care (+2.4%) and real estate (+2.21%) led, while technology (-1.18%) and communication services (-1.87%) lagged. That is money rotating out of megacap tech, not investors selling everything. Asia was more broadly negative: our count there showed 9,835 decliners against 2,697 advancers, and the median tech stock fell 4.92%. Gold is not attracting buyers, down 1.58% at $3,967.80, and the dollar index is off 0.22%.

The 08:30 ET employment cost index matched forecasts. Compensation costs rose 0.8% in the third quarter, slower than the second quarter's 0.9%, and 3.4% over the year. Wages and salaries rose 0.7%, or 3.1% over the year. That adds nothing new to inflation worries, which helps explain the lower Treasury yields. The tougher backdrop is September's PCE inflation data, already published: headline prices rose 0.5% on the month and 3.6% on the year, while the core measure rose 0.3% and 3.1%. Still to come today are the Chicago PMI at 09:45 ET (forecast 55.8, after 58.8) and the Baker Hughes rig count at 13:00 ET. Today is also the last trading day of October.

Exxon and Chevron both beat expectations before the bell, lifted by high refining margins. Exxon earned an adjusted $4.23 a share against the $4.12 expected, raised its dividend and set a $20bn buyback. Chevron's net income rose to $9.9bn. Both are higher pre-market, a small offset from energy that is too little to move the index against the weight of tech.