NEW YORK
A sell-off for technology stocks deepened on Friday, dragging major U.S. indexes toward their worst day since June.
The S&P 500 dropped 1.9 per cent and was on track to erase its gain for October, even though it set its all-time high during the month.
The Nasdaq composite was heading toward its worst day since June, as the weakness for technology stocks dragged it down 3.1 per cent.
"We're moving out of the hopes and dreams phase of the AI trade and into the 'show me' phase," said Joe Tigay, portfolio manager at Equity Armor Investments, in a note to investors.
Intel's stock led the way lower and is flirting with its worst day since 1974 after tumbling 30 per cent.
The chipmaker gave a forecast for profit in the final three months of this year that fell short of analysts' expectations, as CEO Lip-Bu Tan said the personal-computer industry continues to feel pressure.
Amazon sank 2.1 per cent after reporting a weaker profit for the summer than analysts expected.
Potentially more concerning for investors was Amazon's reporting that it burned through $42.4 billion US of cash over the prior 12 months, according to a measure called free cash flow.
It spent $94.8 billion US on property and equipment, primarily through investments in artificial-intelligence technology.
A day earlier, Alphabet's stock dropped more than 12 per cent to its worst day on record and almost single-handedly dragged the S&P 500 lower after telling investors it burned through more cash during the summer than the spring.
The company behind Google and YouTube cited similar, mammoth investments in AI.
A drop of 4.8 per cent for the stock price of Nvidia, whose chips have made it the poster child of the AI frenzy, was the heaviest force pulling the S&P 500 downward, even more than Intel.
Worries are rising about whether all those hundreds of billions of dollars will produce enough profit and productivity to make the investment worth it.
At the same time, stocks of computer chip companies and other winners from the frenzy to build AI data centres have come under pressure on concerns that high interest rates may slow the further build out of data centres.
In the cryptocurrency industry, stocks tumbled following a hack on the world's biggest crypto exchange.
The price of bitcoin fell toward $77,000 US from more than $86,000 US earlier this month, and a U.S.-based blockchain intelligence firm said a North Korean unit was likely behind the attack that impacted more than $6 billion US worth of crypto at Binance.
Coinbase Global fell 12.9 per cent even though it reported stronger results for the latest quarter than analysts expected.
Outside of tech, stocks were more resilient as many rallied after reporting stronger profits for the summer than analysts expected.
Nearly as many stocks rose in the S&P 500 index as fell.
ExxonMobil climbed two per cent, and Chevron added 1.7 per cent after the oil giants both reported stronger profit for the summer than analysts expected.
Mondelez International rose 3.9 per cent due to better than expected growth and Colgate-Palmolive climbed 3.6 per cent after higher prices for its products helped it deliver better revenue and profit than analysts expected.
In the bond market, Treasury yields eased in a signal that investors were buying U.S. government bonds in search of a safer option.
The yield on the 10-year Treasury fell to 4.94 per cent from 4.98 per cent late Thursday and from more than 5.30 per cent earlier this month.
In stock markets abroad, indexes were mostly lower in Europe following sharper swings in Asia.
South Korea's Kospi dropped 3.5 per cent as worries about AI hit its tech-heavy market, while Hong Kong's Hang Seng climbed slightly.
Japan's Nikkei 225 fell 2.1 per cent after the Bank of Japan decided to keep interest rates steady, echoing moves made earlier in the week by the U.S. Federal Reserve and the European Central Bank.
This story was written by the e2gold.ca newsroom from reporting by CBC News, BNN Bloomberg and Midland Daily News. Quotes are checked word for word against that reporting.