The Nasdaq Composite Plunged, the Fear Index Soared 17%: Investors Are Fleeing the Tech Sector
The Nasdaq Composite plunged 2.6% on October 22, marking its steepest decline since June / Photo: X / NYSE
The stock market anxiety index rose sharply on Thursday amid renewed concerns about AI-related investment opportunities. Technology stocks suffered their steepest decline in the past five months: the Nasdaq Composite plunged 2.6%.
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The Cboe VIX volatility index, known as Wall Street’s “fear index,” rose 15.3% in the afternoon, reaching 19.2 points. This spike brought the VIX back to its long-term average, MarketWatch notes: investors are once again concerned about the sustainability of companies’ aggressive spending on AI, which has been driving economic growth and fueling expectations of high future returns. In recent months, the VIX had been at historically low levels as the stock market continued to rise since the beginning of the year.
On October 22, the S&P 500 fell 1.25%. The Dow Jones Industrial Average, a blue-chip index, managed to close in positive territory, gaining a symbolic 0.02%.
It was a particularly tough day for semiconductor manufacturers: investors were actively selling off tech stocks. The PHLX Semiconductor Index fell 6.7% on Thursday. Nvidia shares fell 4.4%, Advanced Micro Devices and Intel shares fell more than 8%, and Micron shares fell 6.3%.
"Investors are fleeing the tech sector," said Mark Hackett, chief market strategist at Nationwide, in an interview with MarketWatch. According to him, a “completely different sentiment” regarding AI spending took hold in the market on Thursday following the release of Meta Platforms’ third-quarter earnings report. Meta’s stock came under heavy pressure despite strong financial results: investors are concerned that, after all of the company’s AI spending, its free cash flow has turned “negative,” Hackett noted.
Shares of six of the seven largest tech companies fell on Thursday following the release of earnings reports by Meta Platforms and Tesla. The Roundhill Magnificent Seven ETF lost 3.35%. Among the “Magnificent Seven” stocks, Apple was the only one to close Thursday’s trading session in positive territory: these shares served as a “safe haven” amid concerns over AI spending, as the iPhone maker isn’t investing billions of dollars in developing its own AI, Bloomberg explains.
This news story is being updated.
This article was AI-translated and verified by a human editor
