Nasdaq falls 2.4% on AI funding concerns, higher oil prices

Key Facts

The Nasdaq Composite fell 2.4% during trading on Thursday, October 22, 2026, as of 12:56 p.m. Eastern time, according to the Associated Press, amid concerns over the cost of financing artificial intelligence investments. Those concerns included rising borrowing costs to build data centers and buy the chips underpinning the sector's expansion plans. The decline coincided with higher oil prices after additional Houthi attacks in Saudi Arabia raised concerns about supplies and a widening regional conflict, according to Reuters. In technology, investors' attention shifted from earnings strength to the capital required to build AI infrastructure. Questions also extended to when these investments would begin generating returns, which Reuters described as "the unclear timeline for their returns."

The issue of financing this expansion came into focus with Meta's announcement of a new class of shares to help fund its costly AI investments, according to Reuters. The new class consists of "non-voting shares," the agency reported, citing the announcement. Meanwhile, Tesla lowered its annual capital expenditure forecast, a move that raised questions about the pace of its AI and robotics ambitions. Meta's announcement concerned securing funding for its expansion, while Tesla's revision addressed the amount it expects to spend during the year. Developments at the two companies put spending plans and financing methods at the center of investors' scrutiny of the sector, alongside their focus on when funds allocated to infrastructure would generate returns.

In Saudi Arabia, The National reported that 2 people were killed and 2 injured on Wednesday, October 21, when debris from a drone intercepted by Saudi defenses fell near a processing facility at the Shaybah field. The debris fell near the oil facility, while the Saudi Energy Ministry said the incident did not affect field operations, according to the newspaper. The National quoted the ministry as saying that "the incident had no impact on operations at the oil field." In the market, Reuters linked the rise in oil prices to concerns that additional Houthi attacks in Saudi Arabia could disrupt supplies. Those concerns were accompanied by fears of a widening regional conflict, while the ministry confirmed that Shaybah operations continued unaffected by the incident.

Against the backdrop of trading, U.S. Labor Department data showed seasonally adjusted initial jobless claims fell to 194,000 in the week ended October 17, 2026. The weekly decline totaled 6,000 claims compared with the week ended October 10. The revised reading for that previous week stood at 200,000 claims, according to the department. The four-week moving average of initial claims also fell to 197,750 in the week ended October 17. The average had stood at 198,750 in the previous week, a decline of 1,000 claims, alongside the drop in the weekly initial claims reading.

Continuing jobless claims moved in the opposite direction, however, rising according to U.S. Labor Department data. The seasonally adjusted total reached 1,728,000 in the week ended October 10, 2026. That compared with 1,703,000 in the week ended October 3. The weekly increase totaled 25,000 continuing claims, while initial claims declined in the more recent period covered by the department's release. Jobless claims thus showed declines in initial claims and their four-week average, alongside an increase in continuing claims in their respective weekly comparison.

Attention on the upcoming release calendar turns to Friday, October 23, according to the economic calendar published by Kiplinger. That day's schedule includes the preliminary reading of the S&P Global U.S. Manufacturing Purchasing Managers' Index. The preliminary reading of the firm's Services Purchasing Managers' Index is scheduled for the same day. Following those two releases, the Federal Open Market Committee holds its next meeting on October 27-28, 2026, according to the Federal Reserve's official calendar. The meeting ends on October 28, the date of the next monetary policy decision.