S&P 500 closes at 7,602.06 amid concerns over AI investment returns
Key Facts
The S&P 500 closed at 7,602.06 on October 30, compared with the previous day's close of 7,720.39, according to EL7 data. A Reuters snapshot at 12:09 p.m. New York time showed the index down 124.20 points, or 1.61%, to 7,595.93, while the Nasdaq Composite fell 2.61%. The difference reflects the timing of the readings: the first is the session close, and the second is the index level during trading. Technology stocks sold off as concern grew that heavy cash spending on artificial intelligence may not generate sufficient returns. Reuters said those concerns drove investors toward U.S. Treasury bonds for safety.
Pressure was concentrated in technology and semiconductor companies, while stocks outside the sector showed greater resilience. The Associated Press said Nvidia's 4.9% decline was the biggest drag on the index, outweighing Intel's impact. In a Reuters snapshot, Intel fell 28%, while Amazon slipped 1.9% after results showed cash burn from heavy investment in developing AI-related technologies. Intel said a slowdown in demand for personal computers could continue into the following year. Portfolio manager Joe Tigay described the shift in investor sentiment: "We're moving from the hopes and dreams phase of AI trading to: Show us the results."
Amazon's results present a mixed picture: strong sales growth alongside clear pressure on cash flow. The company's net sales rose 12% to $201.9 billion in the third quarter, from $180.2 billion in the same period of 2025. But free cash flow for the 12 months ended September 30 turned to an outflow of $42.4 billion, after an inflow of $14.8 billion in the comparable period a year earlier. The company attributed the shift mainly to a $94.8 billion increase in purchases of property and equipment, net of sales proceeds and incentives, and said the investments primarily reflected spending on AI. Meanwhile, Amazon cloud services sales rose 39.3% to $46 billion in the quarter ended September 30, compared with growth of 37% in the previous quarter; that was the fastest growth rate in nearly five years, according to the Associated Press.
Intel reported third-quarter revenue of $16.5 billion, up 21% year over year, according to the company's filing. It forecast fourth-quarter revenue of between $15 billion and $16 billion, diluted earnings per share of $0.10 under U.S. accounting standards and $0.25 on the company's non-GAAP measure. It said the PC market slowdown could continue at least through the first half of the following year, while expressing optimism about opportunities across its broader product portfolio. Reuters reported that the company linked the stock's weakness to cash burn as it invested in AI-related development, alongside slower demand for PCs. The results put the market debate on the ability of capital investments to generate returns, even as some cloud computing businesses continue to grow.
Wage and business activity data formed part of the backdrop to trading at month-end. Compensation costs for civilian workers rose 0.8% in the three months ended September, while wages and salaries increased 0.7% and benefit costs rose 0.9% from June, according to the U.S. Bureau of Labor Statistics. Over the 12 months ended September, private-sector compensation costs rose 3.4%, wages and salaries increased 3.1% and benefit costs rose 3.9%, while inflation-adjusted wages and salaries fell 0.6%. In Chicago, the Business Barometer fell 3.5 points to 55.3 in October but remained above the 50 threshold that signals expansion for a second month. The new orders index fell 0.6 points, while the employment index rose 10.3 points to its highest level since April 2021.
The index had lost 0.3% in the October 29 session, its first decline in four days, despite gains in most of its constituents and in stocks traded on Wall Street overall, according to the Associated Press. In the following session, technology stock declines weighed on the indexes as scrutiny of AI spending levels and expected returns renewed. Markets are awaiting the Institute for Supply Management's manufacturing report on November 2 at 10:00 a.m. Eastern time. The U.S. federal general election follows on November 3, according to the Federal Election Commission. The report and election are the next milestones on the market calendar after the sell-off, while the session's central concern remained the cash funding of AI expansion.