AI Fears Cause Stocks to Drop While Oil Rises – Europe Market Wrap
Stocks edged lower on Friday as concerns over rising AI spending outweighed an otherwise solid earnings report from Alphabet, while higher oil prices added to inflation worries. S&P 500 and Nasdaq 100 futures both fell 0.3%, with investors remaining cautious after another round of corporate earnings.
Alphabet dropped more than 3% in premarket trading after raising its capital expenditure forecast for the year to as much as $205 billion, up from a previous estimate of $190 billion. While the increased investment reinforced confidence in long-term AI growth, it also renewed concerns over how quickly those massive expenditures will translate into profits.
Oil prices remained a key focus, with Brent crude climbing above $98 a barrel for a fifth consecutive session. Ongoing shipping disruptions in the Red Sea fueled fears of tighter global supply, while Germany’s 10-year bond yield climbed to its highest level since 2011 as investors priced in the prospect of tighter monetary policy.
Asian chipmakers continued to benefit from optimism surrounding AI investment, but the picture was more mixed in the US. Texas Instruments failed to impress investors despite strong expectations following a near-70% rally in its shares this year. Attention now turns to Intel’s earnings for the latest indication of demand across the semiconductor industry.
In Europe, the Stoxx 600 fell 0.7% as a busy earnings session weighed on sentiment. STMicroelectronics and Nestlé both declined after disappointing results, adding to the cautious mood across regional markets.
