Dow Jones and Nasdaq Fall at the Open Amid AI Pressure and SpaceX Concerns

Key Facts

Major U.S. indexes opened lower on Friday, October 23, with the Dow Jones falling 171.3 points, or 0.32%, to 52,696.7. The S&P 500 fell 26.2 points, or 0.34%, to 7,637.18, while the Nasdaq Composite dropped 114.9 points, or 0.44%, to 25,893.953. The open followed heavy losses for technology stocks in the previous session and a renewed focus on financing the artificial intelligence boom. At the same time, concerns about potential competition from SpaceX weighed on traditional telecom companies. Shares tied to the sector diverged, with cell tower companies rising before trading began.

AT&T, Verizon and T-Mobile shares each fell about 5% in premarket trading, according to Reuters, after a report said SpaceX was in talks with cellular infrastructure companies to launch a nationwide wireless communications program. The move raised concerns that increased competition could erode the market share of incumbent telecom companies. In the opposite direction, Crown Castle rose 10.5% and American Tower gained 7.3% before the market opened. The divergence illustrates how the potential plan could affect companies providing telecom services differently from operators of sites a new network might need. Concerns centered on the possibility of a new competitor entering the market, not on a broader technological shift in the sector.

According to a Reuters report, SpaceX is negotiating access to at least 80,000 cellular sites in the United States, in a move that could support its path toward building a fourth nationwide wireless carrier. TD Cowen estimated that building a nationwide terrestrial network would cost more than $80 billion. The targeted sites represent half of the 158,500 dedicated cell towers operating in the United States during the year before the report. These figures show the scale of infrastructure a nationwide project could require and help explain the market's interest in talks to access existing sites. Telecom shares came under pressure over the possibility that the discussions could develop into competition on a broad scale.

The selloff in AI stocks was tied to investor concerns about CoreWeave's debt burden and the cost of financing investment in the sector, according to Reuters. Wednesday's gains reversed in Thursday's session, when the Nasdaq fell about 3%, with the decline accelerating after Meta shares dropped about 8%. Meta's third-quarter results showed negative free cash flow of $2.12 billion, compared with positive cash flow of $10.63 billion in the same period a year earlier. A portfolio manager at Dakota Wealth said, "Increased spending, negative free cash flow and not generating enough revenue from the spending are things that worry investors." The concern is therefore focused on companies' ability to finance expansion and turn heavy spending into revenue.

The S&P 500 closed down 1.2% on Thursday at 7,663.43, while the Nasdaq Composite fell 2.6% to 26,008.86. By contrast, the Dow Jones rose less than 0.1% to 52,867.98. The Associated Press said weakness in technology shares masked strength elsewhere in the market, with most U.S. stocks rising in the same session. The agency said concerns about higher interest rates weighed on AI stocks, alongside a decline in Treasury yields. Tesla shares also fell 3.1% on Thursday despite the company reporting stronger earnings than analysts expected, as revenue came in below expectations.

In a separate move related to the headline, SPCX closed at $144.75 on October 22, after ending the previous session at $159.31, according to EL7 data. This came alongside losses for the Nasdaq and S&P 500 in Thursday's session, while the divergence continued between pressure on technology stocks and resilience in most other shares. The market will continue to focus on results from major companies in the following week, with Microsoft, Alphabet and Amazon set to report. The Federal Reserve will hold its next meeting on October 27 and 28, with a press conference scheduled for October 28. Reuters also said elevated oil prices and supply concerns in the Middle East added to inflation worries ahead of the central bank meeting.