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The Nasdaq Composite experienced a significant drop on Friday, closing down 2.86% at 25,437.00, marking its worst single-day performance since June. This decline was driven by a sell-off in technology stocks, particularly those related to artificial intelligence, as investors shifted towards more defensive sectors.
In contrast, the Dow Jones Industrial Average fell 572.25 points, or 1.09%, to 51,770.31, while the S&P 500 decreased by 1.82% to 7,580.07. The market's volatility was exacerbated by traders pulling back ahead of the upcoming midterm elections and the end of the month.
Among the tech giants, Amazon saw its shares drop over 1% following disappointing third-quarter earnings and revenue figures. The company also reported a negative free cash flow of $42.4 billion and maintained its capital expenditure forecast of $220 billion for 2026. Intel faced a sharper decline, with its stock plummeting nearly 29% due to a weak outlook and a 5% revenue drop in its client computing and AI group.
Chipmakers were not spared from the downturn. Advanced Micro Devices fell close to 11%, while Nvidia and Broadcom saw declines of 4% and 5%, respectively. Sandisk, despite beating fiscal first-quarter estimates, dropped 13% after announcing an eight-for-one forward stock split.
As tech stocks faltered, defensive sectors like consumer staples and healthcare gained traction. Walmart and Coca-Cola each rose over 1%, helping to cushion the Dow's losses. Other Dow components, such as Merck and Amgen, also posted gains.
Keith Buchanan from Globalt noted a shift in market sentiment, highlighting the increased scrutiny investors are applying to the sustainability of the current rotation. He emphasized the challenges of financing and economic distribution in the real world, which are becoming more complex.
Adding to the negative sentiment, reports suggested that Anthropic, an AI algorithm company, might not receive an investment-grade rating for its bonds post-IPO. This news, Financial Times, indicated that Blackstone warned investors about a potential "high" junk rating, deviating from previous expectations.
On Thursday, Alphabet shares suffered their worst day on record after missing earnings and revenue targets, resulting in a negative free cash flow of $9.07 billion. This contributed to the Nasdaq's over 1% loss during the regular session.
October proved challenging for the AI sector, with investors closely monitoring companies' spending on infrastructure. Major players like Alphabet and Microsoft did not adjust their capital expenditure forecasts, while neocloud companies faced scrutiny over debt levels. CoreWeave and Nebius saw their shares drop 37% and 35%, respectively, over the month.
The Roundhill Memory ETF (DRAM), which includes AI memory companies like Micron and Seagate Technology, fell 20% in October. Similarly, the iShares A. I. Innovation and Tech Active ETF (BAI) decreased nearly 17%.
As the month concluded, the Nasdaq recorded a 5.3% decline, its steepest since March 2025. The S&P 500 fell 0.9%, while the Dow managed a 1.7% increase. On Friday, the three major U. S. indexes all ended sharply lower, with the S&P 500 dropping 1.82% to 7,580.07, the Nasdaq Composite declining 2.86% to 25,437.00, and the Dow Jones Industrial Average losing 572.25 points, or 1.09%, to 51,770.31.
In other developments, Chevron and ExxonMobil reached record highs after reporting substantial third-quarter profits. Meanwhile, chip ETFs fell below their 200-day moving averages, with the Semiconductor ETF (SOXX) and SMH ETF both trading below this benchmark for the first time in months.
Gold and silver prices also hit their lowest levels since November 2025, with gold futures dropping to $3,946 and silver futures falling to $49.66.
", "gist": "The Nasdaq Composite fell 2.86% on Friday, closing at 25,437.00, as investors moved away from tech stocks into defensive sectors. This marked the index's worst single-day performance since June, amid concerns over tech earnings and the upcoming midterm elections." }
