Concerns over AI profit margins trigger tech stock sell-off, ending S&P 500’s seven-day winning streak; gold futures break $4,000 mark while Bitcoin plunges.

Oracle’s cloud profit margins were reported to be lackluster, triggering a sell-off in large-cap technology and consumer stocks, which weighed on the broader U.S. equity market. Additionally, rising inflation expectations and the ongoing U.S. government shutdown provided a macroeconomic backdrop for the market correction. The S&P 500 and Nasdaq Composite fell during early trading after hitting record highs, ending the S&P 500’s seven-day winning streak.

The following is the performance of core assets:

• During early trading, the three major U.S. stock indexes opened slightly higher, with most technology stocks gaining. IBM rose about 2%, and Dell Technologies surged approximately 5% after significantly raising its earnings outlook. AMD extended the strong momentum from the previous trading session, climbing about 6%. Mining company Trilogy Metals soared over 200% after the U.S. government acquired a stake in the company.

• Precious metals markets performed strongly, with COMEX December gold futures breaking above the $4,000 per ounce mark for the first time in history. In foreign exchange, the euro fell 0.4% against the dollar amid news that the EU proposed limiting duty-free steel imports and might double tariffs on excess steel quotas.

• Market sentiment reversed mid-session. Oracle’s losses in NVIDIA’s server leasing business caused its shares to plummet more than 7%, dragging down the broader market. Meanwhile, data from the New York Fed showed that short-term U.S. inflation expectations hit a five-month high, adding some pressure to the market.
• During midday trading, selling pressure intensified. The Philadelphia Semiconductor Index led declines, dropping over 2%, with widespread declines across sector stocks. Major U.S. indices extended their losses, with the Nasdaq once falling more than 0.9%. Cryptocurrencies declined broadly, with Bitcoin briefly dropping below $121,000, retreating over $5,000 from Monday’s intraday high of above $126,000.
• Previously strong precious metals also plunged from their highs. Spot gold and COMEX gold futures both retreated significantly from historical peaks, with COMEX gold falling below the $4,000 level. COMEX silver futures dropped as much as 2.0% intraday. Meanwhile, the U.S. dollar index strengthened, with the dollar rising against the yen by 1%, nearing the 152 level.

• In the bond market, robust demand was seen in the U.S. Treasury’s three-year note auction, driving Treasury yields lower.

• During the closing session, Tesla officially launched the standard Model Y priced below $40,000, but its share price failed to gain support, extending losses to 4%. Ultimately, all three major U.S. indices closed lower, with the Nasdaq down 0.67%. The semiconductor index and the Russell 2000 small-cap index led declines.

(Intraday movements of the U.S. benchmark stock index)

All three major U.S. stock indexes closed lower on Wednesday, with the S&P 500 ending its seven-day winning streak. The U.S. small-cap index fell more than 1.1%, while the semiconductor index dropped over 2%. The Chinese concept index closed down more than 2.2%, with Pony AI plummeting over 7.7%.

• The S&P 500 Index fell 25.69 points, or 0.38%, to close at 6714.59 points.

• The Dow Jones Industrial Average declined 91.99 points, or 0.20%, to close at 46602.98 points.

• The Nasdaq Composite Index dropped 153.304 points, or 0.67%, to close at 22788.363 points. The Nasdaq 100 Index fell 138.332 points, or 0.55%, to close at 24840.227 points.

• The Russell 2000 Index declined 1.12% to close at 2458.423 points.

• The VIX volatility index, also known as the ‘fear gauge,’ rose 5.38% to close at 17.25.

U.S. sector ETFs:

• The chip ETF fell 2.24%, discretionary consumption dropped 1.72%, and the AI robotics sector declined 1.58%. In contrast, staples consumption increased by 0.92%, while utilities rose 0.45%.

(October 7 – U.S. Stock Sector ETFs)

Mag 7:

• The Mag 7 index fell by 0.77%, closing at 200.49 points.

• Tesla closed down 4.45%, Alphabet A shares fell 1.86%, Microsoft, Meta, NVIDIA, and Apple declined by up to 0.87%, while Amazon edged up by 0.39%.

Semiconductor stocks:

• The Philadelphia Semiconductor Index closed down 2.06% at 6,634.762 points.

• Taiwan Semiconductor’s ADR dropped 2.77%, while AMD rose 3.83%.

Chinese stocks:

• The Nasdaq Golden Dragon China Index fell 2.24% to close at 8,640.94 points.

• Among the popular Chinese concept stocks, Pony AI closed down 7.73%, 21Vianet fell 6.41%, and Yatsen E-commerce, GDS Holdings, and Lufax declined by up to 5.71%.

Other stocks:

• Eli Lilly and Co dropped 0.17%, while Berkshire Hathaway’s Class B shares, owned by Buffett, rose 0.46%.

The blue-chip index of the Eurozone fell nearly 0.3%, but LVMH Group rebounded over 3.6% as investors focused on developments in France. Denmark’s benchmark index fell 1.2%, the Dutch index dropped more than 0.6%, and Italy’s banking sector declined approximately 0.6%.

Pan-European stocks:

National indices:

• Germany’s DAX 30 Index edged up 0.03% to close at 24385.78 points.

• France’s CAC 40 Index rose slightly by 0.04% to 7974.85 points.

• The UK FTSE 100 Index closed up 0.05% at 9,483.58 points.

  (Performance of major European and American stock indices on October 7)

Other stocks:

• Among the blue-chip stocks in the Eurozone, ING Groep closed down 3.20%, while ASML Holding, BMW, and Bayer fell between 2.51% and 2.01%, ranking among the top four decliners.

• Among all components of the European STOXX 600 Index, B&M European Value Retail shares closed down 7.81%, Entain fell 6.54%, Frontline dropped 4.90% as the third-largest decliner, while defense stocks Kongsberg Gruppen fell 4.27% and RENK Group declined 3.35%.

A strong auction of three-year US Treasury bonds led to a general decline in Treasury yields.

US Treasuries:

• At the New York close, the yield on the 10-year US Treasury bond fell 2.71 basis points to 4.1249%.

• The yield on the two-year US Treasury bond fell 2.06 basis points to 3.5677%, with an intraday trading range of 3.6028%-3.5615%.

  (U.S. Treasury yields across major maturities initially rose before falling.)