- Amazon stock plunged more than 7% overnight after its third-quarter capital expenditures ballooned.
- Intel stock tumbled more than 23% after hours after a weak fourth-quarter forecast and a slump in personal computer sales.
- Oil prices climbed higher amid freshly reported tensions in the Strait of Hormuz.
U.S. stock futures traded lower overnight late Thursday after disappointing earnings from Intel Corp. (INTC) and Amazon.com Inc. (AMZN) dragged markets down.
As of 11:44 p.m. EDT, Dow futures fell 0.17%, while the S&P 500 futures were down 0.95% and Nasdaq-100 futures fell more than 2%.
On Thursday, all three U.S. benchmark indexes closed lower. The Nasdaq Composite closed down 1.38%. The Dow Jones Industrial Average fell 0.25%, while the S&P 500 declined 0.30%.
Markets are headed for a mixed close in October, with the Nasdaq likely to end about 2.5% lower, while the Dow and S&P 500 are headed to close in the green.
On Thursday, investors focused on major technology earnings. AMZN stock plunged more than 7% overnight after its third-quarter capital expenditures ballooned past Wall Street expectations, stoking investor anxiety about the sustainability of its AI buildout plans.
The e-commerce giant clocked more than $77 billion in spending on property and equipment over the quarter, primarily for new data center construction and expansion of its computing capabilities. This resulted in a free cash outflow of $42.4 billion.
Meanwhile, its online sales grew just 2%, marking the slowest growth since early 2023. However, Amazon Web Services (AWS) continued a strong upward trajectory, accelerating for the sixth straight quarter.
Gene Munster, managing partner at Deepwater Asset Management, said in a post on X, “From the call, it’s clear $AMZN management wants the Street to think of the company as a AI data center and chips company. Forget retail. That (has) been the consistent message on the call, underscored by them doing the unthinkable: giving two-year AWS revenue growth guidance of 40%+ in each of 2027 and 2028, above the just-reported 39%. They typically only guide AWS one quarter out.”
Meanwhile, INTC stock tumbled more than 23% after hours after the company issued a weak fourth-quarter forecast and personal computer sales slumped.
In the third quarter, Intel posted sales of $16.5 billion, a 21% increase from the same period last year and in line with analysts' average estimates. Adjusted earnings came in at $0.52 per share, beating Wall Street expectations.
However, a severe shortage of memory semiconductors drove up desktop and laptop prices, dampening end-user demand.
CEO Lip-Bu Tan said data center performance could have been stronger without raw material shortages and an unexpected factory shutdown in Israel. He also added that memory pricing is expected to remain a severe industry-wide challenge heading into 2027.
Munster noted Intel’s results in a separate post on X, saying “Main issue is PC demand. If there is pricing pressure on DCAI it suggests they are likely losing share. The company is calling like it is, demand is slowing because of high memory costs. That’s a read on how customers fell about their chips. If customers were demanding them, high memory costs would have little impact on demand.”
The weakness in AMZN and INTC shares spilled over to other chipmakers, dragging down shares of Nvidia Corp. (NVDA), Micron Technologies (MU), Broadcom (AVGO) and Advanced Micro Devices (AMD), among others.
The iShares Semiconductor ETF (SOXX) fell 1.55% at close, while the Direxion Daily Semiconductor Bull 3X Shares (SOXL) dipped more than 4%. The VanEck Semiconductor ETF (SMH) declined more than 1%, and the Roundhill Memory ETF (DRAM) slipped more than 4%. All the funds continued to decline overnight.
Meanwhile, U.S. consumer spending rose in September as inflation remained high at 3.6%. The personal consumption expenditures price index rose 0.5% seasonally adjusted for the month, the largest monthly rise since March, while the annual rate was 0.1 percentage point below expectations. Core PCE came in at 0.3% and 3.1% monthly and annually, respectively.
On the geopolitical front, tensions continue to rise. The navy of Iran’s Islamic Revolutionary Guard Corps (IRGC) said three tankers caught fire in the Strait of Hormuz after hitting mines, while another vessel struck naval mines in the eastern part of the critical waterway.
On Thursday, media reports suggested that U.S.Vice President JD Vance sent Iran a U.S.-backed proposal to restart diplomacy, linking the reopening of the Strait of Hormuz and sanctions relief to early nuclear commitments. However, formal deal negotiations are yet to reach a constructive conclusion.
Oil prices climbed higher amid the freshly reported conflict in the Strait. Brent crude futures were trading at $116.09 a barrel, up more than 1%, while WTI crude futures traded 1.38% higher at $103.41 per barrel.
Intel Corp. (INTC): The computer hardware maker was on the retail radar after disappointing results and a sharp plunge in its share price.
Iovance Biotherapeutics Inc. (IOVA): The stock plunged more than 35% at close and continued to decline overnight after the biotech firm posted the latest lung cancer trial results, which were marginally lower than previously reported response rates.
SELLAS Life Sciences Group Inc. (SLS): The company’s Phase 3 REGAL trial of galinpepimut-S in acute myeloid leukemia reached its prespecified 80th death event, triggering final data analysis, with preliminary topline results expected this quarter. Shares declined about 2% at close on Thursday.
Amazon.com Inc. (AMZN): The e-commerce giant was in the retail spotlight after its Q3 earnings results dragged its share lower.
Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY), the Invesco QQQ Trust (QQQ) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) were all headed lower at the time of writing.
Meanwhile, the 10-year U.S. Treasury yield was trading at 4.925%, while the 30-year yield was 5.29%.
The iShares 20+ Year Treasury Bond ETF (TLT) was up 0.47% amid ‘bearish’ sentiment.
Asian markets opened mixed on Friday. South Korea's KOSPI, China’s SSE Composite, and Japan’s Nikkei 225 opened lower, while Australian stocks ticked higher.
