Dow Falls More Than 500 Points as Tech Stocks Slide and Oil Rises
Key Facts
U.S. stocks fell on Thursday, October 22, with the S&P 500 down 1.2% for its worst daily performance since July and the Nasdaq losing 2.6%, while the Dow Jones added 11.89 points to 52,867.98. The divergence came at the end of a session marked by pressure on technology and AI stocks, even as about two-thirds of S&P 500 companies rose. The Associated Press said losses in the most influential technology stocks obscured that breadth among advancing shares. Weakness spread across Asia before reaching U.S. markets, amid concerns about the cost of financing data centers and buying AI chips. Rising oil prices also fueled concerns related to the war with Iran.
The S&P 500 lost 93.74 points to close at 7,663.43, while the Nasdaq shed 694 points to end the session at 26,008.86. By contrast, the Dow's modest gain limited the index's apparent decline but did not reflect the breadth of pressure on growth and technology companies. The Associated Press said Nvidia was the single biggest drag on the S&P 500. Shares of about two-thirds of the companies in the index rose, but declines in the most influential technology stocks overshadowed their gains. As a result, weakness in the broader index and the Nasdaq coincided with gains among most S&P 500 constituents in the same session.
The wave of weakness began in Asia, where regional indexes have heavy weightings in technology companies, according to the Associated Press. The agency said concerns extend beyond the cost of borrowing to build data centers and buy AI chips, and include investors' belief that stock prices have risen too far. Technology stocks had faced a broad sell-off the previous Friday, when the Nasdaq fell 2.1% for its worst week since June. That backdrop left AI stocks vulnerable to volatility as questions about their valuations grew. The agency described these stocks as fluctuating amid concern over the rising cost of financing the infrastructure needed for the AI boom.
The pressure was evident in shares of companies that reported mixed quarterly results. Lam Research fell 11.8%, despite the company, which makes equipment and provides services for the semiconductor industry, posting quarterly earnings and revenue that slightly exceeded analysts' expectations. Meta shares also fell 7% after revenue for the latest quarter came in above expectations but earnings missed them. Tesla fell 3.1% despite stronger-than-expected quarterly earnings, as revenue came in below market estimates. The moves show that better results on some measures did not prevent stocks from falling during the session, amid pressure on technology companies.
In energy markets, Brent crude rose 4% to $113.17 a barrel after touching its highest level in five months. The Associated Press linked the oil rally to fears of war with Iran, as investors continued to track borrowing costs and inflation risks. In the bond market, the yield on the 10-year U.S. Treasury fell to 4.97% from 5.13% late Wednesday, as investors turned to bonds in search of safer assets. By contrast, Procter & Gamble shares rose 5.6% and, along with other stocks, helped limit market losses. Its chief executive said the company expects «geopolitical and economic challenges» to continue, while maintaining its full-year revenue and earnings growth forecasts.
On Friday morning, October 23, U.S. futures remained under pressure as oil rose. S&P 500 futures fell 0.3%, Dow futures dropped 0.6%, while Nasdaq futures slipped 0.1%. The Associated Press linked the morning moves to faltering efforts to bring the United States and Iran back to the negotiating table. Investors will turn their attention the following week to results from major companies, housing construction data and the consumer confidence index. The agency said investors want to know whether large AI investments are translating into future growth, and whether the sharp rise in stock valuations is justified.