Nasdaq Hits 3-Month Low as Amazon and Intel Rattle AI Trade
Nasdaq Erases Trillion in October
The Nasdaq Composite dropped 650.77 points, or 2.48 percent, to close at 25,533.95 on Friday, hitting its lowest level in nearly three months. The broader index faced intense selling pressure that threatened to wipe out more than $2 trillion for the month of October, capping a steep reversal driven by escalating artificial intelligence spending concerns at major technology firms.
Amazon.com shed 2 percent after reporting a sharp cash outflow in the third quarter alongside signals of increased capital expenditure next year. Meanwhile, Intel headed for its steepest one-day drop on record with a near 29 percent slide. The chipmaker cited a weak PC market, ongoing manufacturing hurdles, and heavy spending to expand production as primary drivers of its cash burn for the year.
Chipmakers and Global Markets Feel the Ripple Effects
The severe warnings from major tech hardware producers triggered a broad selloff across global semiconductor stocks and server manufacturers. Nvidia dropped 3.7 percent, while Advanced Micro Devices slid about 10 percent. The broader chips index shed 7 percent, and server makers Dell and HP lost 10.4 percent and 8.7 percent, respectively. Combined market value losses for Amazon and Intel neared $200 billion, setting up the Nasdaq-100 to erase just over $1 trillion during Friday’s session alone.
“A lot of them kind of got ahead of themselves. It’s all earnings based and right now, they’re not producing,” said Joe Saluzzi, co-manager of trading at Themis Trading. Saluzzi added that despite the severe single-day decline, Intel remained up significantly for the year and viewed the downturn as a market reset rather than the end of the trend.
Nasdaq futures tumble as Amazon, Intel results deepen AI spending woes – Reutershttps://t.co/cyOQcIrwCv
Tech Index Plunges as Binance Heist Hits Crypto Equities
The S&P 500 information technology index absorbed the heaviest blow, plunging 3.9 percent to mark its steepest single-day fall since June 23. The S&P 500 overall lost 120.20 points, or 1.56 percent, to finish at 7,600.19, while the Dow Jones Industrial Average dropped 373.72 points, or 0.71 percent, to 51,968.84. Concurrently, Alphabet traded down marginally following a record selloff in the previous session driven by its own reports of sharp cash outflows. Adding to technology sector headwinds, a $6.3 billion record heist at Binance weighed on crypto-linked equities, pulling Coinbase down 13 percent.
Investors responded to the tech rout by shifting capital into defensive segments. Consumer staples and healthcare indexes rose 1.6 percent and 0.7 percent respectively, with healthcare touching a record high. Energy shares also found support as Chevron and Exxon Mobil advanced 1.7 percent and 1.2 percent following better-than-expected third-quarter profits. Angelo Kourkafas, senior global strategist at Edward Jones, noted that the sector rotation drew strength from an above-trend pace of economic growth and improving earnings from previously lagging market segments.
Federal Reserve Rate Hikes Threaten Corporate Spending Plans
Macroeconomic factors compounded the technology sector’s difficulties as market participants adjusted their outlook for monetary policy. Data from LSEG indicated that the Federal Reserve is expected to hike interest rates by over 50 basis points by mid-2027, a shift that could complicate debt-funded corporate spending plans. The central bank maintained interest rates during its meeting earlier in the week.
Individual equities experienced sharp declines outside of the major indexes as well. Social media platform Reddit plunged 28 percent after CEO Steve Huffman warned that total daily active unique visitors could decline by a low double-digit percentage in the fourth quarter. Market breadth reflected widespread caution, with declining issues outnumbering advancers by a 1.71-to-1 ratio on the New York Stock Exchange and by 2.85-to-1 on the Nasdaq.