The Nasdaq Composite dropped 694 points, or 2.6%, on Thursday, its biggest decline since June, as investors questioned whether heavy artificial-intelligence spending can continue and semiconductor shares led the sell-off. It closed at 26,008.86. The S&P 500 fell 1.21% to 7,663.43, while the Dow Jones Industrial Average gained 0.02% to 52,867.98.
A separate closing snapshot put the S&P 500 at 7,663.39 and the Dow at 52,866.85. The Nasdaq 100 fell 2.90% to 28,958.69. In that snapshot, the iShares Semiconductor ETF sank nearly 7%; an earlier report had it down 3%.
Capital Spending Under Scrutiny
Tesla beat Wall Street estimates for the third quarter, but its shares fell 3% in one session snapshot and 2% in another as investors reacted to lower profitability. The company cut its capital-expenditure estimate for the year to $20 billion from $25 billion.
Meta also beat earnings and revenue estimates and issued strong guidance for the coming quarter. Its shares fell 7% in the closing snapshot and by as much as 7% in the other report, while its annual capital-expenditure estimate remained largely unchanged.
Investors saw greater spending discipline as a possible sign the AI investment boom could slow, with consequences for industry supplies, economist David Rosenberg said. In August, Goldman Sachs projected global AI investment would exceed $1 trillion this year.
“Following an extraordinary run in technology stocks, markets are becoming more demanding around evidence of the payoff from high investment in AI and concerned about the sustainability of this spending amid higher interest rates,” said James McCann, senior economist at Edward Jones.
CoreWeave, a neocloud company facing investor scrutiny over its debt, fell 4% in one report and 10% in another. Its shares had dropped 25% since Oct. 13 in the earlier account and 39% from early-October levels in the closing snapshot. Nvidia CEO Jensen Huang defended CoreWeave and other neocloud companies, saying demand was “off the charts.”
Markets Turn Toward Safer Assets
The 10-year U.S. Treasury yield dropped 11 basis points Thursday, reaching its lowest level in about a month. A separate closing snapshot reported an 18-basis-point decline to about 4.97%, below 5% for the first time in almost a month. Strategists on JPMorgan's markets intelligence desk said the bullish market tone had “reversed overnight” and described a “flight-to-quality trade.”
The bank cited “the still fragile narrative around AI financing concerns and the lack of conviction / re-grossing from the recent tech reversal.” It also said hyperscalers' corporate bond spreads had widened to levels last seen in July.
Oil and Geopolitical Pressure
Brent crude climbed more than 3% to above $112 a barrel in one snapshot and 4% to above $113 in another. West Texas Intermediate gained 2% but stayed just below $100 a barrel in the earlier snapshot. The reports said markets reacted to a New York Times report, citing U.S. officials, that the United States and Israel planned strikes on Iran after the midterm elections. The proposed operation was described as “short but intensive.” Rising oil prices renewed concerns about pressure on supplies.
France's 10-year OAT yield rose 7 basis points amid political unrest. That week, the yield topped 5% for the first time in 24 years amid cost-of-living riots.
David Morrison, a senior market analyst at Trade Nation, said both companies had reported solid results. “The market reaction to these key updates and the overall effect this has had on the chip sector and other AI-adjacent stocks this morning is concerning,” he wrote in a client note, adding that “intermediate support levels are creaking dangerously.” Paul Hickey, co-founder at Bespoke Investment, said investors' mood seemed to follow individual stocks, “plenty of which have been struggling even as the indices trade much closer to all-time highs.”
The Nasdaq closed at 26,008.86.
- technology stocks
- artificial intelligence
- nasdaq composite
- tesla
- meta
- semiconductor stocks
- treasury yields
- oil prices