Global Markets – Tech stocks decline amid concerns over AI and interest rates, global equity markets dip slightly

Full update including the latest developments in the U.S. market, with added analyst commentary.

Chibuike Oguh

Reuters New York, October 15 - On Thursday, global stock markets slipped slightly as continued selling of technology and semiconductor stocks was driven by concerns over artificial intelligence spending and rising interest rates.

As questions mount about the sustainability of data center demand, valuations of companies within the artificial intelligence ecosystem are making investors uneasy.

On Wall Street, the technology-heavy Nasdaq dropped, while the Philadelphia Semiconductor Index .SOX was recently down 2%. The benchmark S&P 500 reversed early losses to edge higher, lifted by healthcare and materials sectors, while the Dow Jones rose by 1%.

CoreWeave CRWV.O, a heavily indebted data center operator that has been swept up in the recent AI storm, fell another 1.8% today after plunging 15% on Wednesday.

The Dow Jones Industrial Average .DJI gained 1.07%, the S&P 500 .SPX rose 0.16%, while the Nasdaq Composite .IXIC dropped 0.23%.

A sharp tech-driven selloff hit Asian equities. South Korea's KOSPI .KS11—previously one of the top beneficiaries of the AI boom due to its major chipmakers—plunged nearly 8%, while the Nikkei 225 .N225 dropped nearly 5%.

“I think this selloff reflects investor caution regarding the more vulnerable segments of the AI ecosystem, and tech executives are also advocating for a slowdown in the development of frontier models,” said Rong Ren Goh, portfolio manager at Eastspring Investments.

“The market is increasingly questioning the sustainability and trajectory of computing power demand. Rising financing costs have intensified these concerns, thus raising the investment threshold for capital-intensive AI infrastructure projects.”

The MSCI Asia Pacific (excluding Japan) Index .MISX00000PUS ended down 3.04%, marking the biggest single-day decline since late July. The MSCI World Index .MIWD00000PUS slipped 0.19%.

European stocks .STOXX recovered from early losses to close up 0.33%.

Bond yields fall

The benchmark 10-year U.S. Treasury yield fell back toward 5%, posting its largest single-day drop in over a year.

Driven by rising costs for goods and services, the U.S. Producer Price Index for September recorded its largest increase in four and a half years, suggesting inflationary pressures have spread from energy to other sectors.

The latest U.S. retail sales data (link) showed that, boosted by higher gasoline prices, sales jumped more than expected last month, though the data also indicated consumption in other areas remains moderate.

The yield on the U.S. benchmark 10-year Treasury note US10YT=RR fell 10.29 basis points to 5.087%.

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Dollar declines

U.S. inflation data released Wednesday (link) again shifted market expectations for the Federal Reserve’s rate path, with traders at one point briefly pricing the odds of a rate hike this month at 50-50, before paring those bets.

According to the CME Group’s FedWatch tool, federal funds futures are now implying a 73% probability that the Fed will leave interest rates unchanged after its two-day meeting ending October 28, little changed from earlier in the week.

In currency markets, the dollar retreated from an 18-month high. Dollar/yen JPY= fell 0.1% to 158.14 yen; the euro EUR= gained 0.42% to $1.12; and the British pound GBP= rose 0.45% to $1.33.

In the crude oil market (link), Brent crude LCOc1 erased losses to rise 0.2% to $106.35 per barrel, as traders weighed the impact of reduced U.S. sanctions on supply against attacks on shipping in the Strait of Hormuz.

Spot gold XAU= gained 1.23% to $4,155.78 per ounce.

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