North American stocks opened lower on Thursday as investor concerns grew regarding Alphabet’s capital expenditure plans and Qualcomm’s disappointing earnings forecast. This decline impacted major indexes across the continent.
Market Declines Amid Alphabet’s Spending Concerns
At 9:31 a.m. ET, the S&P/TSX Composite Index dropped by 1.07%, falling to 32,222.99 points. In the U.S., the Dow Jones lost 324.80 points, or 0.66%, settling at 49,176.50 points. Additionally, the S&P 500 fell 63.21 points, a 0.92% decrease, to 6,819.51 points, while the Nasdaq Composite declined by 314.28 points, or 1.36%, to 22,590.30 points.
Alphabet’s Aggressive Capital Spending
Shares of Alphabet, Google’s parent company, decreased by nearly 6.5% during early trading. The company announced it would double its capital expenditure plans this year to enhance its competitive edge in artificial intelligence (AI). This aggressive investment strategy raised concerns among investors about the ability of big tech firms to generate profitable returns amid significant spending.
Pressure on Other Tech Giants
- Microsoft, Tesla, and Meta Platforms each saw a decline of approximately 2%.
- Big tech companies are expected to invest over $500 billion in AI this year.
Russell Shor, a senior market analyst at Tradu, noted the shift in investor mindset from unchecked optimism to a focus on profitability and funding discipline within the tech sector.
Market Reactions and Sector Performance
Following a week of selloff fears linked to AI advancements impacting demand for traditional software, stocks in the software and data services sector, such as ServiceNow and Salesforce, showed signs of stabilization. Conversely, Qualcomm shares plummeted by about 9.5% after forecasting second-quarter results below expectations.
Broader Market Trends
The S&P 500 experienced its second consecutive drop, with the software and services index declining for a sixth straight day. This index has lost around $830 billion in market value since late January. Small-cap stocks performed better, with the S&P 600 index rising by 0.9%, and the mid-cap S&P 400 index climbing by 0.7%.
Global Economic Indicators
With the U.S. government reopening following a partial shutdown, the Bureau of Labor Statistics announced that January’s jobs report would be released next week. Additionally, new unemployment applications increased more than anticipated for the week ending January 31.
Cryptocurrency and Commodity Movements
Bitcoin suffered a nearly 5% decline, trading below $70,000, its lowest since November 2024. This downturn reflects a broader trend in cryptocurrencies following comments from U.S. Treasury Secretary Scott Bessent regarding regulatory limitations on banks buying digital assets.
International Market Reactions
In European markets, Germany’s DAX dropped by 0.1%, while the CAC 40 in Paris rose by 0.2%. The FTSE 100 in the UK fell by 0.3%. In Asia, Tokyo’s Nikkei 225 decreased by 0.9%, and South Korea’s Kospi plummeted by 3.9%, heavily impacted by losses in major companies like Samsung Electronics.
Commodity Prices and Currency Movements
Energy and Precious Metals
- U.S. crude oil fell to $64.33 per barrel.
- Brent crude dropped to $68.60 per barrel.
- Gold prices declined by 2% to $4,849 per ounce.
- Silver prices fell by 10% to $75.70 per ounce.
Investors have been fluctuating in their preferences as global uncertainties affect commodity prices. The U.S. dollar saw slight gains against the Japanese yen but weakened against the euro.
