US markets experienced a downturn Thursday, reflecting a complex interplay of earnings reports and anxieties surrounding the burgeoning artificial intelligence investment boom. The Dow Jones Industrial Average closed at 47,522 points, down 0.2% from the previous day’s close. The broader S&P 500 fell 1.0% to approximately 6,822 points, while the Nasdaq 100 saw a steeper decline, dropping 1.5% to around 25,735 points.
Investor focus centered on the quarterly reports of the so-called “Magnificent Seven” technology giants. While Apple and Amazon’s results are still pending, reports from Meta, Microsoft and Alphabet (Google’s parent company) presented a mixed picture, underscoring the inherent risks of the current tech landscape. Meta shares plummeted double-digits following a reported earnings decline, raising questions about the sustainability of its growth strategy, particularly concerning its investments in Instagram and related platforms. Despite Microsoft exceeding earnings expectations, its stock also experienced a drop, likely fueled by broader market concerns about AI-related costs. Only Alphabet managed to buck the trend, seeing its shares gain.
The common thread uniting these tech behemoths is massive investment in artificial intelligence. This aggressive push for AI dominance, exemplified by Microsoft’s significant stake in OpenAI and the ongoing integration of ChatGPT, is not yet translating into consistent profitability. These substantial investments are currently weighing on earnings and analysts are increasingly scrutinizing whether they will ultimately justify the billions being deployed. The market is clearly questioning the feasibility of these strategies, anticipating potential future losses.
Beyond the US, the euro weakened against the dollar, trading at $1.1568, effectively costing €0.8645. This decline reflects broader economic anxieties and potentially signals a reevaluation of currency strength.
Gold experienced a stark contrast, skyrocketing with prices reaching $4,022 per fine ounce-a 2.1% increase. This surge could be interpreted as a haven-seeking response to the volatility in equity markets and the lingering uncertainties surrounding economic stability, although speculative investment is likely also playing a component.
Conversely, crude oil prices dipped, with Brent North Sea crude trading at $64.66 a barrel, marking a decrease of 26 cents or 0.4% compared to the previous trading day’s close. This decline may reflect concerns about global demand and the ongoing geopolitical landscape.