Skittish investors haunted by tech sell-off

• Alphabet's capex guidance of $175-$185 billion shocked analysts and triggered a broad tech sell-off despite solid quarterly results
• Asian markets suffered steep losses with South Korea's index down 3.5% and Taiwan off 1%, while silver plummeted 14% and gold fell below $5,000 per ounce
• The ECB and Bank of England are expected to hold rates steady, with the ECB concerned about euro strength potentially causing inflation to undershoot targets

Market Summary: Tech Sell-off Triggers Broad Investor Retreat

Key Development:

Google parent Alphabet shocked markets by announcing capital expenditures of $175-185 billion for the year, significantly exceeding Wall Street estimates. While the company reported solid earnings, the massive AI infrastructure spending announcement triggered widespread selling across technology sectors.

Market Impact:

• Alphabet shares plunged 8% in after-hours trading
• Nvidia declined 2% after the bell
• Asian tech equipment providers suffered heavy losses: South Korea down 3.5%, Taiwan off 1%
• Wall Street futures attempted recovery but quickly lost momentum
• Selling spread beyond tech into precious metals: silver crashed 14%, gold fell below $5,000 per ounce
• European futures pointed to a lower open

Investor Concerns:

The market reaction reflects growing anxiety over exploding AI investment costs combined with already sky-high tech valuations. Fears are mounting that AI automation is beginning to displace jobs in data analytics and software development, raising questions about future returns on massive capital expenditures.

Central Bank Activity:

Both the European Central Bank and Bank of England are expected to hold rates steady on Thursday. The ECB faces concerns that the euro's recent surge against the dollar could push inflation below target. The BoE is maintaining flexibility on future rate cuts while monitoring weakening jobs market impacts on inflation.

Context:

Investors had increased tech exposure ahead of earnings season expecting strong results and positive outlooks, making the Alphabet spending shock particularly painful. The sell-off underscores fragile market conviction despite solid underlying earnings performance.