Nasdaq falls 3.5% as doubts mount over returns on AI spending
Key Facts
The Nasdaq Composite fell 3.5% by 3:05 p.m. Eastern time on Friday, October 30, 2026, the biggest decline among major U.S. indexes, according to the Associated Press. The drop came as investors grew increasingly concerned that spending hundreds of billions of dollars on artificial intelligence would not generate enough profits or productivity gains to justify it. At the same time, the S&P 500 fell 2.3% and was heading for its worst day since June and a third consecutive weekly loss. The Dow Jones fell 723 points, or 1.4%, during the session. The moves showed the selloff spreading from technology stocks to the broader U.S. market, as confidence waned in the ability of heavy spending to generate tangible returns.
Intel led declines in the chip sector, falling 30.7% on Friday, according to the Associated Press. The drop followed the company’s forecast for earnings in the final three months of the year, which was below analysts’ estimates. Earnings for the latest quarter had exceeded expectations, but investors focused on the weaker-than-expected outlook. The divergence highlights technology stocks’ sensitivity to earnings forecasts, even when reported results beat market estimates. Intel’s decline also added to pressure on the Nasdaq in a session marked by broader concerns about the financial viability of artificial intelligence investment.
The Associated Press said the concerns center on whether the hundreds of billions of dollars flowing into artificial intelligence will produce enough profits and productivity to make the investment worthwhile. It quoted portfolio manager Joe Tigay as saying that AI trading is moving "from the hope-and-dreams phase to the show-me phase." The description reflects investors’ shift toward proof of returns after a period marked by high expectations for the technology’s potential. That wait for evidence intersects with the impact of interest rates, as higher rates could slow data-center expansion, according to the report. Doubts about expected returns and the cost of financing thus combined to pressure stocks tied to the sector.
The session was preceded by a 1.4% drop in the Nasdaq to 26,184.72 points on Thursday, October 29, according to the Associated Press. That came after a historic decline in Alphabet shares on weaker-than-expected growth, putting technology stocks under pressure ahead of the broader selloff the next day. In a separate Reuters update at 12:09 p.m. Eastern time on Friday, the Nasdaq was down 2.61% at 25,500.67 points, while the S&P 500 fell 1.61%. The Associated Press reading at 3:05 p.m. then showed the Nasdaq down 3.5% and the S&P 500 down 2.3%. These readings highlight how the decline widened during the session, with each update reflecting a different time.
In other asset markets, spot gold fell 3% to $3,901.83 an ounce on Friday, its lowest level in a year, according to Reuters via Euronext. Brent crude, by contrast, rose 2.4% to $117.58 a barrel, with oil heading for a fourth consecutive month of gains in October. A Reuters report linked oil’s move to supply concerns, while the market backdrop pointed to lower Treasury yields as investors sought safe-haven assets. The rise in oil coincided with pressure on stocks and investor concerns that energy costs and inflation could further complicate the interest-rate outlook. The moves presented a mixed picture for the session: gold and stocks fell, while oil rose amid supply concerns.
After the selloff, investors are looking ahead to U.S. data and upcoming political events. The Institute for Supply Management’s manufacturing purchasing managers’ index is due on November 2, 2026, while the U.S. midterm elections begin on November 3, according to the dates cited in the story. The U.S. October jobs report is then scheduled for release on November 6, 2026, at 8:30 a.m. Eastern time, according to the U.S. Bureau of Labor Statistics. These dates provide successive markers for tracking economic activity and the labor market after the volatile session. Friday’s losses kept the market focused on technology companies’ earnings outlooks and on whether AI spending can meet investors’ demand for proof of returns.