(Oct 23): The tech-heavy Nasdaq slid more than 2% on Thursday as growth stocks weakened after earnings from mega-caps Tesla and Meta did little to address artificial intelligence (AI)-related concerns, with a recovery in oil prices further adding to market unease.

Meta slipped 5.2% after the social media giant unveiled a new class of non-voting shares to help fund its costly AI expansion. The decline came despite stronger-than-expected quarterly revenue and an upbeat fourth-quarter (4Q) sales forecast.

The market weakness marked a sharp reversal from Wednesday, when robust results from SpaceX and Super Micro sparked an AI-fuelled rally. The optimism faded as investors shifted their focus from earnings strength to the enormous capital required to build AI infrastructure and their uncertain return timeline.

The selloff put the Philadelphia SE Semiconductor Index on track to shed more than US$616 billion (RM2.51 trillion) in market value, while the Nasdaq-100 was set to erase nearly US$1 trillion. The semiconductor index fell 5.6% to its lowest since July 29.

"Semiconductors and the Nasdaq have been elevated to a huge degree by investors' rush to participate in the AI build-out. Investors are now reassessing the pace of AI spending and the returns that spending can generate," said Steve Sosnick, chief market analyst at Interactive Brokers.

Tesla fell 0.7% after the electric-vehicle maker cut annual capital expenditure forecast, raising questions about the pace of its AI and robotics ambitions.

Other constituents of the 'Magnificent 7' group also declined, with Amazon.com and Nvidia down more than 3% each.

At 11.58am ET, the Dow Jones Industrial Average fell 29.18 points, or 0.06%, to 52,826.91. The S&P 500 lost 85.27 points, or 1.1%, to 7,671.9, while the Nasdaq Composite slipped 551.5 points, or 2.06%, to 26,152.9.

Six of the 11 S&P 500 sectors posted losses, led by technology, down more than 2.7%.

Consumer staples were leading the gains with a 2.5% rise. Procter & Gamble jumped 6.1% to a near eight-month high after the consumer goods giant beat first-quarter estimates.

The S&P 500 value index was flat compared to a 2.2% drop in its growth counterpart.

Brent crude was hovering near its five-month high, after more Houthi attacks in Saudi Arabia stoked fears of supply disruptions and a wider Middle East conflict. 

A flight to safety pushed the 10-year yield down to around 5.0025%.

Meanwhile, weekly jobless claims unexpectedly fell, pointing to a resilient labour market and supporting expectations that the Federal Reserve will keep interest rates unchanged at its meeting next week.

On the earnings front, S&P 500 third-quarter (3Q) profit growth is forecast at 32.3%, up from 30.7% previously, according to LSEG data.

Blackstone gained nearly 6% after the alternative asset manager beat 3Q profit expectations, while chief operating officer Jon Gray said widening credit spreads on AI-linked debt could create opportunities to secure higher returns.

Lockheed Martin climbed 5.9% after the defence contractor raised annual sales and profit forecast.

Spotify rose 9% after the Swedish music streaming firm forecast 4Q profit above Wall Street estimates, betting on its AI-powered features to drive user growth.

Declining issues outnumbered advancers by a 1.06-to-1 ratio on the NYSE and by 1.23-to-1 on the Nasdaq.

The S&P 500 posted 35 new 52-week highs and three new lows, while the Nasdaq Composite recorded 70 new highs and 247 new lows.

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