Wall Street drops to worst day since June after tech stocks sell-off deepens

Wall Street has suffered its biggest drop since June.

A sell-off for tech stocks deepened after worries Wall Street's frenzy over AI technology sent prices too high.

Intel's stock plunged 28.6 per cent for its worst drop since 1974.

The S&P 500 tumbled 1.8 per cent for its worst day since June, as it closed out a third-straight losing week.

The weakness for technology stocks dragged the Nasdaq composite down a market-leading 2.9 per cent, while the Dow Jones Industrial Average dropped 572 points, or 1.1 per cent.

The US stock market remains only 3.1 per cent below its all-time high, but it has become increasingly shaky as Tuesday's midterm elections approach.

Worries about AI in general have already become a concern for voters across political parties, and President Donald Trump has historically used the stock market's performance as a measure of his own success.

Intel's stock led the way lower and plunged 28.6 per cent for its worst drop since 1974.

The chipmaker gave a forecast for profit in the final three months of this year that fell short of analysts' expectations, as CEO Lip-Bu Tan said the personal-computer industry continued to feel pressure.

The drop came even though Intel reported a stronger profit for the latest quarter than analysts expected.

Amazon fell 1.4 per cent after reporting a weaker profit for the summer than analysts expected.

Potentially more concerning for investors was Amazon's reporting that it burned through $US42.4 billion ($60.3 billion) of cash over the prior 12 months, according to a measure called free cash flow. It spent $US94.8 billion ($134.8 billion) on property and equipment, primarily through investments in artificial-intelligence technology.

A day earlier, Alphabet's stock dropped more than 12 per cent to its worst day on record and dragged the S&P 500 down after telling investors it burned through more cash during the summer than the spring. The company behind Google and YouTube cited similar, mammoth investments in AI.

Worries are rising about whether all the hundreds of billions of dollars will produce enough profit and productivity to make the investment worth it. At the same time, stocks of computer chip companies and other winners from the frenzy to build AI data centres have come under pressure on concerns that high interest rates may slow the further build-out of data centres.

"We're moving out of the hopes and dreams phase of the AI trade and into the 'show me' phase," said Joe Tigay, portfolio manager at Equity Armor Investments, in a note to investors.

A drop of 4.2 per cent for Nvidia, the chip company that became the poster child of the AI frenzy, was the heaviest force pulling the S&P 500 downward, outweighing even Intel.

In the cryptocurrency industry, meanwhile, stocks tumbled following a hack on the world's biggest crypto exchange.

The price of bitcoin fell below $US77,000 ($109,500) from more than $US86,000 ($122,300) earlier this month, and a US-based blockchain intelligence firm said a North Korean unit was likely behind the attack that impacted more than $US6 billion ($8.5 billion) worth of crypto at Binance.

Coinbase Global fell 10.6 per cent even though it reported stronger results for the latest quarter than analysts expected. Strategy, which says it owns about 4 per cent of the total supply of bitcoin, fell 7.8 per cent. It also reported a stronger profit for the latest quarter than analysts expected, while saying its chief financial officer will resign next week for personal reasons.

Indexes were mixed in Europe following sharper swings in Asia.

South Korea's Kospi dropped 3.5 per cent as worries about AI hit its tech-heavy market, while the Hang Seng in Hong Kong climbed 1.5 per cent.

Japan's Nikkei 225 fell 2.1 per cent after the Bank of Japan decided to keep interest rates steady, echoing moves made earlier in the week by the Federal Reserve and the European Central Bank.