Nasdaq tumbles 2.6% as AI spending concerns resurface and chip stocks slide
Key Facts
The Nasdaq Composite closed down 2.6% on Thursday, October 22, 2026, as concerns over artificial intelligence spending resurfaced and technology shares came under pressure. The index lost 694 points to finish at 26,008.86, according to the Associated Press, in a session where losses were concentrated in technology and semiconductor companies. The S&P 500 fell 1.2%, also weighed down by heavy pressure from technology stocks on U.S. indexes. But the performance of the major indexes diverged from the broader market, with the Associated Press saying that "most U.S. stocks actually rose" during the session. Concerns cited by the news agency included rising borrowing costs to finance data centers and AI chips.
At the center of the selloff, Meta shares fell 7.0% after the company recorded a cash outflow for the first time in more than a decade because of its AI spending, according to Reuters. Losses spread to the chip sector, where the Philadelphia Semiconductor Index plunged 6.7% during Thursday's session. That was the index's biggest daily percentage loss since June 23, according to the news agency's report, as several stocks in the sector fell sharply. Intel, AMD, SanDisk and Marvell shares each lost more than 8% in the same session. In the chipmaking equipment sector, Lam Research shares fell 11.8%, according to the Associated Press. The stock declined despite the company's earnings and revenue slightly exceeding market expectations.
In the debt market, investors bought U.S. government bonds in a flight to safety, according to the Associated Press, as technology stocks were roiled. The yield on U.S. ten-year Treasury notes fell to 4.97% on Thursday as investors moved into bonds. The yield had reached 5.13% on Wednesday evening before falling in the following session. In energy markets, Brent crude jumped 4%, an advance that coincided with the decline in U.S. Treasury yields. Crude reached $113.17 a barrel amid concerns over the war with Iran, according to the news agency.
On the labor market, the U.S. Labor Department's October 22 release showed seasonally adjusted initial jobless claims fell to 194,000 for the week ended October 17. The weekly decline was 6,000 from the revised previous reading of 200,000 for the week ended October 10. The reading was below expectations of 200 thousand claims, according to EL7's economic calendar, which recorded the actual reading at 194 thousand. The four-week average of claims also fell to 197,750 from a revised previous average of 198,750, a decline of 1,000. By contrast, seasonally adjusted continuing claims rose to 1,728,000 for the week ended October 10, according to the Labor Department. Those claims increased by 25,000 from the revised previous reading of 1,703,000 for the week ended October 3.
These developments follow the Federal Reserve's quarter-percentage-point interest rate increase at its September meeting, according to its monetary policy decision statement. The increase brought the target range for the federal funds rate to 3.75%–4%. The meeting minutes showed that "most participants judged that another increase in the target range for the federal funds rate would likely be appropriate by the end of the year." The U.S. central bank holds its next meeting on October 27–28, 2026, following the release of jobless claims data and the selloff in technology stocks. That will be followed by a meeting scheduled for December 8–9, according to the Federal Open Market Committee's official calendar.