Stock Market Recap: Nasdaq Sinks 2.9% for Worst Day Since June as AI Spending Fears Hit Tech; What's Next Week

Friday’s tech sell-off got worse as the day went on. By the closing bell on Oct. 30, the Nasdaq had posted its largest one-day percentage drop since June 5, and the S&P 500 had its worst day since June, according to Reuters and the Associated Press.

The trigger was the same one that shook markets Thursday: worries that the biggest tech companies are spending enormous sums on artificial intelligence without a clear payoff. Disappointing quarterly results from Intel and Amazon, released late Thursday, added fuel.

This article is for general information only and is not investment advice.

How the stock market closed Friday, Oct. 30

Source: Reuters closing figures.

Reuters reported that the Nasdaq is now down 7.8% from its record closing high, set on Oct. 6. All three major indexes finished the week lower. For the month, the S&P 500 and Nasdaq posted losses while the Dow ended October with a gain.

Why is the stock market down today?

The short answer from Friday’s reporting: AI spending worries, led by chipmakers.

• Intel shares plunged 28.6%, Reuters reported, after its earnings.
• Chip stocks dropped broadly. Nvidia fell 4.2% and AMD 10.9%, and the broader chip index lost 7.2%, leaving it with a monthly loss of more than 15%.
• Server makers Dell and HP fell 10.8% and 9.6%.
• Amazon pared its early losses as the session went on, according to Reuters.
• Crypto-linked stocks Coinbase, Strategy and Robinhood fell between 7.2% and 10.6% following reports that hackers stole $6.3 billion from Binance, the world’s largest crypto exchange.

CNBC noted that Alphabet plunged 12% on Thursday, its worst one-day drop on record, and slipped another 1.7% Friday. Amazon became the third so-called hyperscaler, after Alphabet and Meta Platforms, to report negative free cash flow, CNBC said, adding to concerns about the rising debt of the biggest tech companies.

“It’s fair to say that this week, not just today, has been very much about the future of AI and what that’s going to look like, whether there will be a positive return on investment and if so, how quickly,” Oliver Pursche of Wealthspire Advisors told Reuters.

What went up

Not everything fell. Exxon Mobil and Chevron rose 2.2% and 2.8% after beating profit expectations, Reuters reported. CNBC said most of the 11 S&P 500 sectors still posted weekly gains as traders moved into areas such as health care and consumer staples, with Coca-Cola and Procter & Gamble standing out.

On the downside outside tech, Starbucks dipped 1.8% after forecasting an annual revenue decline tied to the divestiture of its China business.

The bigger picture: earnings are still strong

Despite the sell-off, third-quarter earnings season has been solid overall. Of the 299 S&P 500 companies that had reported, 82% beat expectations, according to LSEG data cited by Reuters, and analysts expect year-over-year earnings growth of 31.6%.

CNBC reported that BTIG’s Jonathan Krinsky warned the S&P 500 could soon test its 200-day moving average near 7,306.

Stock market news: what to watch next week

The week of Nov. 2-6 is packed, according to CNBC:

• Election Day, Tuesday, Nov. 3. The midterms arrive, though investors quoted by CNBC expect the AI trade and earnings to matter more for markets.
• Big earnings. 138 S&P 500 companies report, including Apple and Palantir on Monday, AMD on Tuesday and Qualcomm, Uber and McDonald’s on Wednesday.
• October jobs report, Friday, Nov. 6. Economists expect about 55,000 jobs added, with unemployment steady at 4.2%, per FactSet figures cited by CNBC.

CNBC also pointed to the Stock Trader’s Almanac, which says November has historically been the Nasdaq’s best month in midterm election years. Past patterns do not guarantee future results.

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Earlier coverage: Stock Market Today: Nasdaq Drops More Than 2% as Amazon, Intel Results Extend Tech Sell-Off on Month's Last Day (Oct 30)