S&P 500 falls 1.8% in worst session since June as tech sell-off widens
Key Facts
The S&P 500 ended Friday, October 30, down 1.8%, its worst day since June, as the sell-off in U.S. stocks widened. The Nasdaq Composite closed down 2.9%, while the Dow Jones Industrial Average lost 572 points, or 1.1%, according to the Associated Press. Technology stocks came under the heaviest pressure amid growing concerns that companies’ massive spending on artificial intelligence can generate profits and productivity gains that justify the investment. The agency said higher interest rates also weighed on chipmakers and data center stocks. Investors’ attention thus focused on the returns companies can earn from AI investments, as risks to oil supplies through the Strait of Hormuz intensified.
Intel led declines among individual stocks, falling 28.6% in its biggest drop since 1974, after the company’s profit forecast for the final three months of the year fell short of analysts’ expectations. Intel said the personal computer industry continues to face pressure, pointing to ongoing challenges for demand for its processors. Nvidia, meanwhile, fell 4.2% and was the single biggest drag on the S&P 500, outweighing Intel’s impact. Nvidia’s decline came as chip stocks fell under the weight of questions about the returns on AI-related spending. Portfolio manager Joe Tigay said the market was “moving from the hopes and dreams phase of the AI trade to the show-me-the-results phase.”
Friday’s session was preceded by a more than 12% drop in Alphabet shares on Thursday, its worst day ever, after the company told investors its cash spending over the summer exceeded its level in the spring, attributing the increase to AI investments. Amazon shares fell 1.4% on Friday, after the company recorded net cash spending of $42.4 billion over the previous twelve months. Its spending on property and equipment reached $94.8 billion over the same period, with most directed toward AI investments. In the bond market, the yield on the 10-year U.S. Treasury fell to 4.93%, from 4.98% late Thursday, after topping 5.30% earlier in October. The volatility index for options on the S&P 500 rose 13.02% to 19.44 points, according to data cited by Investing.com from Reuters.
In energy, Brent crude rose 2.4% at the close to $113.43 a barrel, approaching the upper end of its range since the war with Iran drove oil prices and inflation higher, according to the Associated Press. Crude rose amid conflicting reports of tanker fires in the Strait of Hormuz. Iran’s Revolutionary Guard said four oil tankers, including one carrying more than two million barrels, struck mines and caught fire. The Associated Press could not verify Iran’s claims about the other three tankers. Separately, Oman said it had evacuated 25 crew members from a Panama-flagged tanker that came under attack and caught fire 1.6 nautical miles off the coast of Musandam Governorate; it was unclear whether the incident was related to what Iran described.
Stocks fell as official data showed the U.S. economy growing faster: real gross domestic product grew at an annual rate of 3.4% in the third quarter of 2026, compared with 2.2% in the second quarter, according to the U.S. Bureau of Economic Analysis. The bureau attributed the acceleration mainly to faster investment growth and a shift in government spending toward an increase, while exports made a negative contribution. On October 28, the Federal Reserve had kept its target interest rate range at 3.75% to 4%, in a decision approved by 10 votes to 2. The Fed said economic activity was expanding at a solid pace, domestic spending remained resilient and capital investment was strong, while inflation remained elevated. In its policy statement, it also pointed to continued elevated geopolitical uncertainty.
On the diplomatic front, Iranian state media said Friday that Qatari mediators had returned to Tehran for talks with Iranian officials in an effort to end the war with the United States and Israel. This comes after stocks fell and oil rose in a session marked by overlapping technology concerns and energy risks. The U.S. Bureau of Economic Analysis is scheduled to publish its second estimate of third-quarter GDP and corporate profits on November 25, 2026. The estimate is released at 8:30 a.m. Eastern Time. The next release will provide an updated reading on growth and profits in a quarter that recorded annualized growth of 3.4%.