The Nasdaq 100 fell 4%. October could be its worst month in a year and a half.
Photo: X / NYSE
The sell-off on the U.S. stock market intensified: just over an hour before the close of trading on October 30, the Nasdaq 100 technology index plummeted 4%—falling to its lowest level in nearly three months. The broader Nasdaq Composite index was down as much as 3.8% at its lowest point. Along with the Nasdaq 100, it is heading for its worst month in more than a year and a half, according to calculations by The Wall Street Journal and Bloomberg. Meanwhile, the broad U.S. stock index, the S&P 500, lost 2.42% on the day, while the Dow Jones Industrial Average, a blue-chip index, fell 1.43%.
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What's going on?
A sharp drop in tech stocks has heightened concerns that the hype surrounding artificial intelligence—which has been fueling the bull market—may be overblown, according to Bloomberg. Amazon shares plunged 7% in premarket trading on October 30 after its quarterly earnings and revenue fell short of analysts’ expectations, and the tech giant’s 12-month free cash flow turned negative (Amazon shares later recovered some of their losses, but at the time of publication were still trading down 2%). Meanwhile, Intel shares—whose revenue forecast fell short of market expectations—are heading for their biggest drop in more than 40 years, losing more than 30%. Bank of America analysts downgraded their rating on the company’s stock from “buy” to “neutral” following the earnings report. They justified their position, among other things, by noting that “the company has not demonstrated convincing progress in attracting third-party customers for its contract chip manufacturing.”
Following Intel’s lead, shares of chipmakers around the world fell into the red, Reuters notes: Nvidia shares dropped 5%, and AMD shares fell 12%. The Philadelphia Semiconductor Index plummeted 8%. Shares of server manufacturer Dell lost nearly 12%.
If the losses continue through the end of the trading session, Amazon and Intel will collectively lose nearly $200 billion in market value, and the Nasdaq 100 index will lose just over $1 trillion in market capitalization by the end of Friday, according to Reuters. Since the beginning of the month, the index could lose more than $2 trillion.
What People Are Saying in the Market
“The focus on AI is shifting from a phase of hopes and dreams to a ‘show me the results’ phase,” says Joe Tigey of Equity Armor Investments. “Full order books are great, but investors want to see who is truly capable of fulfilling commitments, turning demand into profit, and generating cash flow,” — the fund manager noted, emphasizing that “this is precisely where the gap between the winners and the losers is widening.”
"We see that the market is clearly splitting into two camps: AI-related companies and virtually everyone else," said Kyle Schmidt, a strategist at NISA Investment Advisers, as quoted by MarketWatch.
This article is being updated
This article was AI-translated and verified by a human editor
