by Abigail Summerville

NEW YORK (Reuters) – The New York Stock Exchange ended lower on Thursday after Microsoft and Meta warned of increased costs linked to the development of artificial intelligence (AI) which could weigh on their future results, with the effect of curb investor enthusiasm for technology stocks, the drivers of the records set this year by Wall Street.

The Dow Jones index fell 0.90%, or 378.08 points, to 41,763.46 points.

The broader S&P-500 lost 108.22 points, or 1.86%, to 5,705.45 points.

The Nasdaq Composite fell 512.78 points (2.76%) to 18,095.15 points.

The week is marked by a range of quarterly results, including five of Wall Street’s “Magnificent Seven”.

If Microsoft and Meta Platforms beat expectations in the third quarter, the press releases published after the close on Wednesday fueled concerns about the heavy investments made for AI. They lost 6% and 4.1% respectively on Thursday.

Two other tech giants, Amazon and Apple, also fell ahead of the post-hours release of their quarterly results. Alphabet, the first of this group of five to have published its results on Tuesday, lost 1.9%.

“Three of the Magnificent Seven have basically said they have endless budgets for AI spending, and investors don’t like to hear that,” commented Carol Schleif, chief investment officer of BMO Family Office.

“The medium- and long-term impacts are really important for US growth and productivity in the long term (…) In the short term, investors are wondering where the profits are,” she added. Microsoft and Meta both warned Wednesday evening that their capital expenditures continued to grow in order to have the structures powering AI-related services, with the potential consequence of diminishing their profitability.

Adding to pressures on stocks and tech, the yield on 10-year US Treasury bonds rose to above 4.3%.

A report published today showed that the personal consumption price index in the United States rose 0.2% in September, as expected, reassuring traders in their bet that the Federal Reserve (Fed) will proceed during its November meeting to a rate cut of 25 basis points.

“Nothing in the data released this week should rule (the Fed) out of a quarter-point cut next week,” Carol Schleif said.

Among the major sectors of the S&P-500, information technology recorded the largest decline.

Also note, on the values ​​side, Estee Lauder experienced the worst session in its history, falling 20.9%, after withdrawing its forecasts for next year. Uber Technologies plunged 9.3% after reporting lower-than-expected guidance for the fourth quarter.

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( Jean Terzian)

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