S&P 500 slips 4% from its peak as AI selloff stirs recession fears

Disappointing results from Intel, Amazon and Alphabet have turned the market's favorite growth story into its biggest macro risk The trade that carried Wall Street for years is now the thing keeping economists up at night. As of November 2, the S&P 500 sits approximately 4% below its recent high, and the Nasdaq is down about 10%. A Reuters commentary filed from Orlando warns that a slump in AI-linked stocks could sharply worsen a global slowdown that already looks to be underway, possibly pushing several major economies into recession. How the AI trade cracked The spark came from earnings season. Results from Intel, Amazon and Alphabet disappointed, and investors began asking an awkward question about AI: how much more cash can these companies burn before the payoff shows up? The reaction was brutal for some names. Intel shares fell between 28.6% and 29% in a single session after its report. Alphabet fared better, though not by much. Its shares dropped as much as 12.6% on results day, with negative free cash flow getting particular attention. Free cash flow is the money left over after a company pays for its operations and its investments. When it turns negative, the business i...