AI spending fears spark tech selloff, S&P 500 and Nasdaq tumble
US stocks fell sharply on 22 October as earnings reports stoked fresh doubts about AI investment. The Nasdaq dropped 2.58 per cent, its steepest daily fall since June, led by semiconductor losses. The S&P 500 lost 1.19 per cent, while the Dow edged up 0.03 per cent.
US stocks tumbled on 22 October and the Nasdaq posted its steepest daily drop since June as a batch of high-profile earnings reports ignited fresh fears about the AI spending race, according to The Standard.
The S&P 500 ended deep in negative territory. The tech-laden Nasdaq, dragged down by microchips, fell the most in the wake of a spate of AI-related earnings results.
Meta Platforms beat analyst expectations, but its stock tumbled after the Facebook parent posted its first cash outflow in more than a decade due to AI-related expenditures and announced plans to issue non-voting shares in a two-for-one split to raise capital for the technology, the report said. Tesla shares fell even though the electric car maker unexpectedly posted positive free cash flow in the quarter and cut its 2026 capital spending plans.
The Philadelphia SE Semiconductor Index plunged. With Thursday’s decline, the index has lost about one-fourth of its value since its record closing high on 22 June, yet it remains sharply higher for the year, well outperforming the S&P 500’s year-to-date gain.
“It’s a wonderful day on Wall Street. 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,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois. “Investors are starting to realise that there are some holes in the AI story. And that’s having an impact on the indices because they’re so heavily weighted toward technology.”
On the geopolitical stage, Iran-backed Houthis launched new strikes against Saudi targets, sending crude prices to a five-month high. Investors worried that ongoing Middle East strife could keep inflation hot and force the US Federal Reserve to keep raising interest rates. Data from the Labor Department showed initial claims for unemployment benefits kept drifting along near multi-decade lows. Financial markets are currently pricing in the probability that the central bank will raise its policy rate by another 25 basis points before year-end.
According to preliminary data, the S&P 500 lost 92.40 points, or 1.19 per cent, to end at 7,664.77 points, while the Nasdaq Composite lost 690.28 points, or 2.58 per cent, to 26,008.86. The Dow Jones Industrial Average rose 17.51 points, or 0.03 per cent, to 52,873.60. Third-quarter earnings season is well underway, with 111 of the companies in the S&P 500 having reported. Of those, 83 per cent have beaten analyst expectations, according to the most recent LSEG data.