The AI Boogeyman Haunts the Market this Halloween
US stocks plunged in the final trading day of the month as earnings from Amazon (AMZN) and Alphabet (GOOG, GOOGL) this week rekindled concerns about the amount of money Big Tech is spending on its AI ambitions.
The Nasdaq Composite (^IXIC) tumbled 2.8% as a tech-fueled sell-off intensified. The Dow Jones Industrial Average (^DJI) fell 1.2%, or over 650 points, while the S&P 500 (^GSPC) dropped 2%.
For the month, the Dow gained 1.5%, while the Nasdaq and S&P 500 gave up gains, falling 5.2% and 1.2%, respectively. October marked the worst month for the Nasdaq since March 2025.
Stocks fell for the second day in a row after Amazon and Alphabet posted rare earnings misses, renewing concerns about the sustainability of the AI boom. Amazon shares fell 2%, while Alphabet continued to erase market value after its stock suffered its worst day in over 20 years.
Intel (INTC) also suffered a brutal reaction to its earnings report, dropping 29% in premarket trading after the company's Q4 outlook came up short.
One bright spot in the market was ExxonMobil (XOM) and Chevron (CVX), whose stocks briefly touched record highs after the oil majors reported that their earnings were boosted as refining margins widened amid the war in the Middle East. Pharmaceutical company AstraZeneca (AZN) also reported an earnings beat before the opening bell.
While earnings remain in focus, oil prices rebounded higher, putting additional pressure on markets. Brent crude futures rose to $112 per barrel, while WTI crude reached $104 per barrel.
Bitcoin (BTC-USD) prices tumbled more than 2% as crypto assets were rattled following a $6.3 billion hack on cryptocurrency exchange Binance, marking the largest heist of its kind in history.
Sean Conlon, Justina Lee and Deena Zaidi of CNBC also report stock market rocked as investors dump tech shares; Nasdaq suffers worst day since June:
The Nasdaq Composite tumbled on Friday, while the Dow Jones Industrial Average outperformed as traders moved out of key stocks related to artificial intelligence and into more defensive areas of the market.
The tech-heavy Nasdaq lost 2.86% and closed at 25,437.00, posting its worst single-day performance since June. The index was also roughly 8% below its recent high. The blue-chip Dow was down 572.25 points, or 1.09%, to end at 51,770.31. The S&P 500 slid 1.82% to 7,580.07.
Selling pressure intensified in afternoon trading as investors took money off the table into month-end and ahead of next week’s contentious midterm elections.
Amazon shares lost more than 1% after the company reported earnings and revenue for the third quarter that fell short of Wall Street’s expectations. The e-commerce and cloud giant also posted negative free cash flow of $42.4 billion and maintained its 2026 capital expenditures forecast for $220 billion.
Intel, meanwhile, tanked almost 29% after issuing a weak outlook for the current quarter, pointing to a slowdown in PCs. Revenue in the company’s client computing and physical artificial intelligence group declined 5% from the year-ago quarter to $8.1 billion.
Sandisk was also down 13%, even as its fiscal first quarter results beat estimates. The data storage company announced an eight-for-one forward stock split.
Chipmakers more broadly were under pressure as well. Advanced Micro Devices dropped close to 11%, while others such as Nvidia and Broadcom fell 4% and 5%, respectively.
As investors rotated out of tech, defensive areas such as consumer staples and healthcare saw gains. Walmart and Coca-Cola each rose more than 1%, keeping the Dow’s losses in check. Fellow Dow members Merck and Amgen were also higher.
“The tone has changed a bit, and whether that changes the sustainability of the rotation is still yet to be determined,” said Globalt’s Keith Buchanan, who noted that this is a “scrutinizing” and “discerning” market. “Last year was hope. This year is: At the end of day, how does this all work in real world terms, like how to finance [it] and who gets the economics. Those questions are much more difficult to answer.”
“There are real economy risks, and the market’s picking up on that,” the senior portfolio manager added.
Adding to the downbeat sentiment, The Financial Times reported, citing sources, that Blackstone told investors Anthropic may not receive an investment-grade rating after its debut. Anthropic’s S-1 filing offered some momentum to the AI trade earlier this week, but pressure resumed as Wall Street digested more tech earnings.
On Thursday, Alphabet shares posted their worst day on record after the company missed on earnings and revenue in the third quarter and posted negative free cash flow of $9.07 billion. The Google-parent’s slide dragged the Nasdaq to a more than 1% loss in the regular session.
Friday marked the final trading day in October. The month was rocky for the AI trade, with investors paying close attention to companies’ spending around the build-out. Hyperscalers Alphabet and Microsoft did not lift their capital expenditures forecasts.
At the same time, neoclouds — the cloud-computing companies that are behind the infrastructure needed for AI datacenters — are facing investor scrutiny over their debt levels. CoreWeave, which has seen a surge in its bond yields, is the poster child of that worry: Shares cratered 37% in October. Nebius plummeted almost 35% on the month.
The Roundhill Memory ETF (DRAM), which includes AI memory plays Micron and Seagate Technology, is off 20% in October, while the iShares A.I. Innovation and Tech Active ETF (BAI) is down nearly 17%.
Traders wrapped up a losing month, with the Nasdaq dropping 5.3%, its steepest fall since March 2025. The S&P 500 declined 0.9%, while the Dow added 1.7%.
Add to this, shares of Reddit cratered 29.22% on Friday, the worst drop since becoming a public company in 2024, after the company forecast weak fourth-quarter sales in its latest earnings report.
Rich Asplund of Barchart also reports stocks fall sharply on Intel and Amazon sell-offs and crypto heist:
The S&P 500 Index ($SPX) (SPY) fell -1.82% on Friday, the Dow Jones Industrial Average ($DOWI) (DIA) fell -1.09%, and the Nasdaq 100 Index ($IUXX) (QQQ) fell -3.46%. December E-mini S&P futures (ESZ26) fell -1.76%, and December E-mini Nasdaq futures (NQZ26) fell -3.46%.
US stocks fell sharply on Friday after Intel and Amazon fell on disappointing earnings reports released Thursday afternoon. Further AI worries emerged after the Financial Times reported Friday that Blackstone told investors Anthropic may not receive an investment-grade credit rating immediately after going public. Chip stocks saw heavy losses, led by a -28% plunge in Intel. Higher oil prices also hurt stocks.
Market sentiment was also hurt by news of a $6.3 billion heist at the Binance exchange, which led to heavy losses in crypto stocks.
The Dow Jones Industrial Average fell by less than the S&P 500 or Nasdaq 100, as 12 of the 30 stocks closed higher. Some large-cap consumer, pharma, and oil stocks saw some defensive buying as investors rotated out of tech stocks.
Crypto-exchange Binance has frozen all withdrawals until possibly Sunday after a $6.3 billion heist on Thursday. Binance said it would reimburse customers for losses. The exchange holds some $135 billion of assets. North Korean hackers were blamed for the incident. Bitcoin on Friday fell by more than -2%, adding to Thursday’s loss of -3% on the initial news of the Binance heist.
Dec WTI crude oil prices rallied +2.1% on Friday as the market faces the possibility of a US military strike on Iran as soon as next week, after Tuesday’s (Nov 3) US mid-term elections. The Wall Street Journal reported Thursday that a top US commander has briefed President Trump on his military options. Meanwhile, European diesel futures rose on a report that Ukraine hit a refinery in Russia’s Samara region. Reports also cited two attacks on vessels in the Strait of Hormuz.
Stocks are supported by the prospect of solid quarterly earnings. According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +31% from a year earlier, up from a July estimate of 22%. As of Thursday, 286 of the S&P 500 companies have reported results, with 82% beating estimates.
Overseas stock markets closed lower. The Euro Stoxx 50 closed down -1.22%. China’s Shanghai Composite closed down -1.44%. Japan's Nikkei-225 Stock Average closed down -2.12%.
December 10-year T-notes (ZNZ6) rose by +14.5 ticks. The 10-year T-note yield fell -1.0 bp to 4.927%, adding to Thursday’s -8.1 bp decline. T-note prices rose on safe-haven demand with the sharp sell-off in the stock market and crypto assets. T-note prices were undercut by the rally in crude oil prices, although the 10-year breakeven inflation expectations rate fell -0.6 bp to 2.343%.
The FOMC at its 2-day meeting that ended Wednesday left its federal funds rate target unchanged at 3.75-4.00%, as the market expected. The markets are now pricing in a 73% chance of a +25 bp rate hike at the FOMC’s next meeting on December 8-9.
European government bond yields declined. The 10-year German bund yield fell -3.3 bp to 3.322%. The 10-year UK gilt yield fell -1.0 bp to 5.284%.
The ECB at its meeting Thursday left its deposit rate unchanged at 2.50%, as the market expected. The markets are now pricing in an 82% chance of a +25 bp rate hike at the ECB’s next policy meeting on December 17.
The Magnificent Seven all fell on Friday, led by a -4.2% plunge in Nvidia (NVDA).
Amazon.com (AMZN) fell -1.4% on Friday, trimming its losses after earlier falling more than -5%. Amazon fell after its quarterly report Thursday afternoon showed larger-than-expected capital spending on an AI buildout and slower growth in its core e-commerce business. The market was disappointed with Q4 operating income guidance of $28.5-33.5 billion, with a midpoint below the consensus of $32.99 billion. The market was also concerned that Amazon spent more than $77 billion on capex in Q3 to build data centers and pursue AI services.
Chip stocks were slammed, with the iShares Semiconductor ETF (SOXX) falling -8.2%. Intel (INTC) was the main driver of the chip sell-off, with a decline of -28%. Qualcomm (QCOM) fell more than -11%. AMD (AMD) and Marvell (MRVL) fell more than -10%.
Intel (INTC) fell -28% after releasing a disappointing earnings report Thursday afternoon after the stock market closed. Even after Friday’s plunge, however, Intel’s stock is still roughly three times higher than it was in mid-2025. Intel missed revenue expectations due to a severe slump in the PC market and supply-chain delays with data center components. Intel guided for $15-16 billion of Q4 sales, below the market consensus of $17 billion, and Q4 earnings of 25 cents per share, below the consensus of 43 cents.
Bitcoin (^BTCUSD) fell -2% on Friday, adding to its -3% decline on Thursday. Crypto stocks fell sharply on another black eye for crypto security with the massive Binance heist. Bullish (BLSH) fell -16%, Galaxy (GLXY) fell -12% and Coinbase (COIN) fell -11%.
Oil companies saw strength on higher oil prices and positive earnings news from ExxonMobil, Chevron and BP, all beneficiaries of higher oil and fuel prices tied to the US war in the Persian Gulf and the Ukraine-Russia conflict. Valero (VLO) and Phillips 66 (PSX) rallied more than +3%. Marathon closed up +2.8%, and ExxonMobil (XOM) closed up +2.2%.
Reddit (RDDT) plunged -29% after reporting that daily active users in Q3 were weaker than expected and below-consensus Q4 revenue guidance.
Regeneron shares (REGN) rallied +13% after a Q3 revenue and earnings beat.
Berkshire Hathaway Inc (BRK/A), Estee Lauder Cos Inc/The (EL), Axsome Therapeutics Inc (AXSM), IDEXX Laboratories Inc (IDXX), Loews Corp (L), CNA Financial Corp (CNA), Public Service Enterprise Grou (PEG), Tempus AI Inc (TEM), Entergy Corp (ETR), Choice Hotels International In (CHH), Marriott International Inc/MD (MAR), Fox Corp (FOXA), Clorox Co/The (CLX), Vornado Realty Trust (VNO), Apple Inc (AAPL), Vertex Pharmaceuticals Inc (VRTX), People Inc (PPLI), Diamondback Energy Inc (FANG), Viper Energy Inc (VNOM), Realty Income Corp (O), Healthpeak Properties Inc (DOC), Voya Financial Inc (VOYA), BWX Technologies Inc (BWXT), Janus Living Inc (JAN), Neurocrine Biosciences Inc (NBIX), Williams Cos Inc/The (WMB), SBA Communications Corp (SBAC), Palantir Technologies Inc (PLTR), Match Group Inc (MTCH), Advanced Energy Industries Inc (AEIS), Fabrinet (FN), Jazz Pharmaceuticals PLC (JAZZ), Allison Transmission Holdings (ALSN), MSA Safety Inc (MSA), Celanese Corp (CE), Equitable Holdings Inc (EQH), Corebridge Financial Inc (CRBG), Lattice Semiconductor Corp (LSCC), ON Semiconductor Corp (ON), BioMarin Pharmaceutical Inc (BMRN), Roku Inc (ROKU).
Alright, it's Friday. Happy Halloween 2026!
The hedge fund deleveraging horror show continued this week, impacting big tech, hypertech and biotech.
It was a week where the 'Magnificent 7' stocks saw stunning declines:
Long known as the "Magnificent Seven" stocks, Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Amazon (AMZN), Tesla (TSLA), Meta (META), and Google (GOOG, GOOGL) shares are acting anything but, especially compared to their 52-week highs.
Meta and Alphabet are effectively in bear markets, down more than 20% from their 52-week highs, as the Yahoo Finance AlphaSpace graphic below shows. Tesla is off by 19.2%, Amazon by 15.1%, and AI chip darling Nvidia by 12.2%.
Meta, Alphabet, Amazon, and Tesla have been crushed following earnings reports that showed pressured free cash flow amid aggressive AI spending. Nvidia is down due to fears that all these hyperscalers are overspending and will be forced to pull back in 2027.
Below, you can scan the worst-performing US large-cap stocks today, it pretty much sums up the story (full list here):
So, what is causing this latest wave of selling?
Pick your poison: hedge funds deleveraging, US midterms on Tuesday, a possible strike against Iran, declining cash flows among large hyperscalers, etc.
I was telling some friends this afternoon that this all feels like manufactured fear; nothing fundamental has changed.
Maybe the market doesn't like the prospect of Democrats sweeping on Tuesday, maybe traders fear Trump will contest/ negate results and wreak havoc.
I don't know, but the selling is way overdone in my opinion, and things can shift fast on the upside over the next three months.
For example, share price of Alphabet (GOOG) dropping so precipitously to its 100-week moving average has historically been a buying point:
Also, check out action in the VanEck Semiconductor ETF (SMH) this week:
It dropped to its 200-day moving average and while it can go lower in the short run, to me, this is a huge buying opportunity.
What am I basing this on? On the weekly chart, which remains more constructive:
I can go through tons of charts similar to this one, including the technology Select SPDR ETF (XLK) and especially the iShares US MSCI Momentum factor ETF (MTUM) which is a huge buy if it holds here:
Lastly, my favourite biotech stock went on sale over the last two days and if you never heard of it, you better do a deep dive here:
And it wasn't all bad news this week; check out shares of Eli Lilly, surging to a new record high after delivering another stellar earnings report:
That's all from me, try to enjoy your weekend. Hopefully, the next three months will be a lot better than October.
Below, the CNBC Investment Committee debates how to navigate the selloff in tech.
Also, Steve Sosnick, Interactive Brokers chief strategist, and Tom Lee, Fundstrat head of research, join 'Power Lunch' to discuss the tech slide slamming Nasdaq. Lee says it looks like someone was liquedated today.
Third, Jeremy Siegel, Wharton School professor, joins 'Closing Bell' to discuss the week in the markets.
Lastly, in this episode of The Weekly Wrap, Steve Eisman digs into Anthropic’s newly released S-1 and notes that revenue growth fell from 147% in Q2 to 45% in Q3 as tokenmaxxing ended. He then walks through an earnings week in which Google fell 12%, ServiceNow dropped 27%, Amazon held its capex flat for the first time, and Intel and Caterpillar were punished. He closes with a couple of mailbags on CoreWeave’s debt and the Telepocalypse narrative.