Global Markets Plunge Amid Tech Earnings Disappointments and Political Tensions
Global markets weathered a volatile week marked by political uncertainty in Israel and steep tech sell-offs on Wall Street. Alphabet and Intel suffered historic losses following earnings reports, while crypto markets reacted to a major exchange security breach.
Global financial markets experienced a dramatic week, driven by political uncertainty in Israel and disappointing corporate earnings reports on Wall Street. In Tel Aviv, the primary focus centered on election outcomes that pointed to a political tie, raising concerns over potential instability. Meanwhile, overseas markets reacted sharply to major corporate results, highlighted by steep declines and record daily drops in shares of tech giants.
Tel Aviv Exchange Volatility
Trading on the Tel Aviv Stock Exchange opened the week with moderate gains on Monday, despite a controversial media interview by Prime Minister Benjamin Netanyahu. With the exchange closed Tuesday due to national elections, the foreign exchange market exhibited heightened nervousness. By Wednesday, indices dropped sharply across the board, led by real estate, construction, banking, and insurance sectors. While losses moderated slightly on Thursday, indices resumed a steep downward trajectory on Friday, tracking losses on Wall Street.
Several local stocks captured significant attention. Real estate firm Alony Haaretz, controlled by Yaakov Atrakji, signed an agreement to acquire full ownership of the Beit BaKfar nursing home network for approximately 1.7 billion shekels, representing an 83 percent premium over its previous closing price. The strategic move expands Alony Haaretz beyond residential development into the senior housing sector, prompting a 62 percent surge in Beit BaKfar shares. Conversely, Strauss Group shares dropped more than 10 percent amid market turbulence in Brazil following President Lula da Silva's election victory, which triggered a sharp decline in the local stock index and the Brazilian real. Brazil accounts for roughly 35 percent of Strauss Group's sales, making the currency depreciation a risk to local-currency revenues and profits. Payment firm Pament experienced heavy volatility after losing nearly half its value in a month, prompting an unusual exchange disclosure clarifying that its business operations remained normal, which subsequently drove a 26 percent rebound.
Tech Sell-Off on Wall Street
On Wall Street, despite the Federal Reserve's decision to leave interest rates unchanged, investor attention focused squarely on third-quarter earnings, particularly from major technology companies. Boeing released third-quarter results showing modest year-over-year improvement with revenues rising 4 percent to 24.2 billion dollars and net losses narrowing to 116 million dollars. Despite a record order backlog of 745 billion dollars, investors grew disappointed over slow recovery paces in the commercial aircraft division, sending shares tumbling 10 percent.
Alphabet, the parent company of Google, drove the most significant market disruption, plunging nearly 13 percent on Thursday to mark its worst trading day since its 2004 IPO. The drop erased roughly 475 billion dollars from the company's market capitalization. Third-quarter earnings missed analyst expectations on both top and bottom lines, accompanied by a negative free cash flow of approximately 9 billion dollars. Investors worried that massive capital expenditures of 51 billion dollars directed toward artificial intelligence infrastructure are weighing on results while core search revenue growth slows.
Intel and Mobileye Struggles
Intel shares also endured a dramatic week, plunging 29 percent on Friday in its worst single-day trading session since 1974, wiping out about 140 billion dollars in market value. The sell-off occurred despite better-than-expected quarterly earnings, as investors panicked over a weak next-quarter revenue forecast of 15 to 16 billion dollars, falling short of the 17 billion dollar consensus. Headwinds include a slump in personal computer markets, memory chip shortages, and an explosion at the company's Kiryat Gat plant expected to shave 600 million dollars from revenues over two quarters.
Intel subsidiary Mobileye, the Israeli autonomous driving technology firm, hit an all-time low, bringing its market valuation down to approximately 5.5 billion dollars compared to 16.7 billion dollars at its 2002 IPO. The decline occurred despite beating quarterly consensus estimates and slightly raising annual guidance, as investors remained concerned over growth deceleration, Chinese competitive pressures, and uncertainty surrounding the planned departure of founder and CEO Amnon Shashua. Meanwhile, memory chip manufacturer SanDisk reported surging quarterly revenues of 11.03 billion dollars, up 378 percent year-over-year, alongside a stock split announcement, though shares still faced downward pressure.
Crypto Hack Impacts Markets
Cryptocurrency market turbulence spilled over into broader Wall Street equities following a major security breach at the Binance exchange that resulted in the theft of approximately 6.3 billion dollars in digital assets. Associated equities suffered sharp losses, with Coinbase plunging 13 percent, Bitcoin holding firm Strategy dropping 8 percent, Circle declining over 9 percent, and mining firm IREN falling more than 10 percent, exacerbated by weaker-than-expected trading revenues reported by Coinbase.
