Stocks Drop Pre-Market on AI Spending Concerns, Rising Bond Yields
Pre-market trading saw declines in major stock indices due to concerns over rising capital expenditures by tech firms like Alphabet (GOOGL) and Tesla (TSLA), alongside higher bond yields driven by inflation fears from surging oil prices. Alphabet raised its full-year capex guidance to $205 billion, marking a significant shift as it reported negative cash flow for the first time since going public over two decades ago. Similarly, Tesla’s stock fell after weaker-than-expected Q2 earnings and increased spending led to its first cash burn in two years. The rise in oil prices—WTI crude surged more than 4% following military tensions between U.S. forces and Iran—fueled inflation concerns, pushing the yield on the 10-year Treasury note up three basis points to 4.70%. Investors are now looking ahead for key economic data like jobless claims and upcoming earnings reports from major firms including Intel (INTC). The broader market saw losses in most Magnificent Seven stocks as well as software companies, while AI server maker Super Micro Computer (SMCI) rose sharply after boosting its guidance.
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