Oct 22 (Reuters) – On Thursday, U.S. equities fell sharply, with the Nasdaq recording its biggest one‑day decline since June after a series of high‑profile concerns over the AI spending race.
The S&P 500 closed firmly in the red, while the technology‑heavy Nasdaq, weighed down by semiconductor stocks, posted the largest drop following a wave of prominent AI‑related earnings reports.
Meta Platforms posted earnings that surpassed analyst forecasts, yet its shares fell after the Facebook parent recorded its first cash outflow in over ten years because of AI‑related spending and disclosed plans to issue non‑voting shares in a two‑for‑one split to fund the emerging technology.
Tesla’s stock declined despite the electric‑vehicle maker unexpectedly generating positive free cash flow for the quarter and trimming its 2026 capital‑expenditure budget.
The Philadelphia SE Semiconductor Index, a key driver of the recent bull market, plunged sharply.
Following Thursday’s slide, the SOX has shed roughly 25% of its value since its record close on June 22, though it still sits well above its start‑of‑year level, outpacing the S&P 500’s year‑to‑date gain.
“It’s a wonderful day on <a said Paul Nolte, senior wealth adviser & market strategist at Murphy & Sylvest in Elmhurst, Illinois. "The only part of the market that is really suffering here is technology, which has been the golden child of the markets up until about June."
“Investors are starting to realize that there are some holes in the AI story,” Nolte added. “And that’s having an impact on the indices because they’re so heavily weighted toward technology.”
On the geopolitical front, Iran‑backed Houthis carried out fresh attacks on Saudi targets, pushing crude oil prices to a five‑month peak. Investors fear that continued Middle East tensions could sustain inflation pressures and compel the U.S. Federal Reserve to continue raising rates.
Labor Department data indicated that initial unemployment benefit claims remained close to multi‑decade lows. This labor‑market stability gives the Fed room to concentrate on curbing inflation. Markets are currently pricing in a chance that the central bank will lift its policy rate by an additional 25 basis points before the end of the year.
Preliminary figures show the S&P 500 fell 92.40 points, or 1.19%, closing at 7,664.77, while the Nasdaq Composite dropped 690.28 points, or 2.58%, to 26,008.86. The Dow Jones Industrial Average edged up 17.51 points, or 0.03%, to 52,873.60.
