(Bloomberg) — Stocks tumbled around the world, with chipmakers leading losses, as investors pulled back on the artificial-intelligence frenzy and earnings disappointed.
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The Stoxx 600 (^STOXX) sank more than 1%, extending the big tech rout on Wall Street. Nestle SA (NESNZ.XC), Stellantis NV (STLAP.PA) and Kering SA (KER.PA) dropped on earnings that missed estimates. French stocks were on the verge of a 10% correction. US stock index futures were little changed after the S&P 500’s 2.3% slump on Wednesday.
“There seems to be a broad reassessment on the cost and benefit calculus for the artificial intelligence ecosystem,” said Homin Lee, senior macro strategist at Lombard Odier Singapore Ltd. “Anxieties about consumer demand also persist due to hints of softening data in the US. These worries could prove temporary in the end, but a collective reappraisal by investors is natural after such a furious rally.”
With earnings season in full flow, investors are watching US data on gross domestic product and initial jobless claims due later Thursday for further evidence of the economy’s health. Former New York Fed President William Dudley called for lower borrowing costs — preferably at next week’s gathering. Such a move could be worrisome as it would indicate officials rushing to avoid a recession, some analysts say.
Yields on two-year Treasuries dropped seven basis points to 4.35% as traders brought forward rate-cut expectations. Meanwhile, the yen rallied more than 1% amid growing expectations that the interest rate gap between Japan and the US is finally set to shrink.
Corporate Highlights:
Nestle SA lowered its sales outlook for the year as consumers balked at price increases on branded food, water and pet-care products.
Stellantis shares fell after the carmaker’s earnings plunged in the first half of 2024. Morgan Stanley said free cash flow was a key disappointment, while noting the stock’s weak performance this year.
Kering shares tumbled 10% after warning profit is set to plunge in the second half of the year, laying bare the…
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