This update was written automatically with AI from market data and news wire reports, and published without review by a person.
Key Takeaways
- Intel (INTC) shares plunged 29% on Friday, marking its sharpest one-day decline on record and wiping out over $100 billion in market capitalization following a weak revenue outlook.
- Richmond Fed President Thomas Barkin signaled that the surge in AI investment is driving demand-side inflation, suggesting the Federal Reserve may need to "lean against" these pressures to reach its 2% target.
- US equity markets opened sharply lower, with the Nasdaq dropping 2.21% and the S&P 500 falling 1.15% as disappointing tech earnings and manufacturing data weighed on investor sentiment.
- The US MNI Chicago PMI for October fell to 55.3, missing analyst estimates of 56.0 and declining from the previous month’s 58.8, indicating a slowdown in regional business activity.
- China and Switzerland signed an upgraded free trade agreement, granting Swiss food and goods significantly expanded access to Chinese markets in a move that defies global protectionist trends.
Tech Rout Led by Intel’s Historic Collapse
Intel (INTC) shares experienced a catastrophic sell-off Friday, falling as much as 29% to their lowest levels since early 2026. The plunge followed the company's third-quarter earnings report, where it warned that a global shortage of AI-related chips is ironically hurting its core PC business by driving up components costs and slowing manufacturer demand. Intel’s fourth-quarter revenue guidance of $15 billion to $16 billion fell significantly short of the $17.1 billion consensus estimate, leading to the largest single-day market cap loss in the company's history.
The broader technology sector faced heavy selling pressure as other giants reported underwhelming results. Amazon (AMZN) shares fell 5.3% on a weak holiday outlook, while Nvidia (NVDA) dropped 2.5%. The Nasdaq Composite led the market decline, shedding nearly 580 points shortly after the opening bell as investors recalibrated growth expectations for the AI sector.
Fed’s Barkin Links AI Boom to Inflationary Pressures
Richmond Federal Reserve President Thomas Barkin provided a hawkish backdrop to the market volatility, noting that the "enormous AI investment cycle" is creating broad-based cost pressures. Barkin stated that AI investment is leading to demand-side inflation, a specific type of economic pressure that the Federal Reserve is equipped to "lean against" through its interest rate policy. He emphasized that while the direction of travel for the Fed is toward lower rates, the pace remains the primary question as businesses plan to pass increased costs on to consumers.
Barkin also highlighted a "surprise" resilience in consumer spending despite flat incomes, but warned that supply chain pressures from data center expansions are keeping inflation "enduring." He reiterated the Fed's commitment to a gradual approach, suggesting that the central bank will remain cautious in its upcoming meetings to ensure the 2% inflation target remains achievable.
Manufacturing Slows as Geopolitical Shifts Continue
Economic data released Friday showed the US MNI Chicago PMI cooling to 55.3 in October, down from 58.8 in September. While the figure remains in expansionary territory (above 50), the miss against the 56.0 estimate suggests that high borrowing costs and broad cost pressures are beginning to temper industrial activity in the Midwest.
On the geopolitical front, China and Switzerland finalized an upgraded free trade agreement in Beijing. The deal, hailed by Presidents Xi Jinping and Guy Parmelin, will eventually see 99.8% of Swiss exports enter China duty-free. This agreement is viewed as a strategic win for Switzerland, providing "unusually free access" to Chinese markets at a time when the US and EU are increasing trade barriers.
In the US political arena, the Republican National Committee announced that former President Donald Trump has rearranged his campaign schedule to replace in-person rallies in Iowa and Kansas with a "72-hour sprint" of tele-rallies. The shift is intended to maximize reach across 20 states in the final days before the midterm elections. Meanwhile, the Kremlin indicated that dates for trilateral negotiations regarding the Ukraine conflict are being finalized, though Moscow maintains that the timing will depend on the "situation on the battlefield."
Automated market updates written with AI from market data and news wire reports, published without human review.