Stocks in Japan and South Korea both fell over 2%, with chipmaker SK Hynix Inc. tumbling even with solid earnings. In the US, the S&P 500 slumped 2.3%, its worst showing since December 2022 and one that ended the best stretch without a 2% drop since the start of the global financial crisis.

The tech-heavy Nasdaq 100 fell 3.7% weighed down by its largest constituents. Alphabet Inc. slid 5% after sinking more resources into its drive to outmatch rivals in AI, with spending higher than analysts expected. Tesla Inc.’s profit miss and the Robotaxi delay spurred a 12% stock plunge. Nvidia Corp fell 6.8%.

“Investors are finally waking up to all that AI spend and realizing it is much more of an expense right now rather than a revenue generator,” said Peter Boockvar at The Boock Report.

The yen steadied Thursday after rallying more than 1% to the strongest levels against the US currency since May in an advance that reflected an unwind in carry trades.The move is “potentially squeezing the yen short positions, given yen-funded carry trading has been a popular strategy over the last few years,” Saxo Capital Markets’ head of FX strategy Charu Chanana wrote in a note.The Bank of Japan is likely to stand pat on interest rates for longer in a boost to the nation’s equities, according to BlackRock Inc., which has a high conviction investment view on Japanese stocks. The BOJ meets later this month.In the bond market, Treasuries gained Thursday in Asian trading after the curve steepened in the previous session on bets the Federal Reserve is close to cutting rates. Australian and New Zealand longer-dated yields rose Thursday.

Former New York Fed President William Dudley called for lower borrowing costs — preferably at next week’s gathering. For many analysts, such a move would be worrisome as it would indicate officials rushing to avoid a recession. Later Thursday in the US, investors will see further evidence of the health of the economy with US GDP and initial jobless claims data being released.

An index of dollar strength was little changed Thursday after a similarly flat Wednesday. The Canadian dollar held declines from the prior day as the Bank of Canada cut rates for a second consecutive meeting and signaled further easing was ahead. In the Philippines, the nation’s central bank suspended currency trading for a second day due to Typhoon Gaemi.

Elsewhere in Asia, South Korea’s economy flipped back into reverse last quarter adding to challenges for policymakers as they struggle to stimulate investment and consumption.