Alphabet’s AI Spending Spooks Tech Investors
The benchmark S&P 500 Index is down for a third session as this week’s turbulent trading sessions continue, not only led by a sell-off in chip and software stocks, but also by one of the so-called “Magnificent Seven” companies, Alphabet. The tech giant is down 4% in premarket trading after announcing a major increase in artificial intelligence spending that frightened investors enough to bail out of the stock.
Qualcomm Crashes on Memory Shortage Forecast
Before the opening, Qualcomm is also taking a hit, dropping 11% in the pre-market after posting a disappointing forecast due to a global memory shortage.
Other notable stocks taking an early hit are Estee Lauder, Carrier Global and Arm Holdings. Bucking the early trend are Align Technology, Corpay and Cardinal Health.
Layoff Data Hits Highest Since Financial Crisis
Disappointing labor market data also weighed on sentiment after outplacement firm Challenger, Gray & Christmas reported that U.S. employers announced 108,435 layoffs in January, the biggest total since the global financial crisis. Additionally, weekly initial claims for the week ended January 31 rose more than expected, according to the U.S. Labor Department.
S&P 500 Breaks Below 50-Day MA, Turns Bearish
The March E-mini S&P 500 Index flipped to bearish on Wednesday when it closed under the 50-day moving average at 6929.77, making it new resistance. The index also turned lower for the year when it dropped under 6892.50. The downside momentum created by those moves puts the January 21 bottom at 6814.50 and a 50% level at 6813.00 on the radar.