Nasdaq Ends October With Worst Monthly Performance Since March 2025, Down 7.8% From Peak
Key Facts
The Nasdaq Composite ended October with its weakest monthly performance since March 2025, in a month that erased some of the stock gains driven by enthusiasm for artificial intelligence, according to Reuters. On October 30, the index was 7.8% below its highest closing level, while it fell 2%, or 518.34 points, in the week ended that day, according to the Associated Press. EL7 data showed the Nasdaq closed at 25,339.734 points on October 30, after recording 26,184.72 points on October 29 and 25,955.34 points on October 23. Selling pressure came as investors stepped up scrutiny of the scale of AI spending and its expected cash returns. In the same session, Intel shares fell 28.6%, while Amazon shares pared much of their losses as trading progressed, according to Reuters.
Concerns centered on technology companies’ ability to turn AI investments into returns, after Amazon’s report raised concerns about its spending on those investments, according to Reuters. The Associated Press reported that the company had used $42.4 billion in cash over the previous twelve months and spent $94.8 billion on property and equipment, most of it related to AI investments. The scale of spending puts investors before a question of when returns will arrive, not simply whether demand for AI technologies exists. Oliver Birch of Wealthspire Advisors said the market is focused on "whether the investment will generate a positive return, and if so, when." He added that companies that fail to keep pace with high expectations face punishment from the market, according to Reuters.
The four hyperscale cloud companies together accounted for more than a third of S&P 500 companies’ capital spending over the previous twelve months, according to Reuters. As that share has grown, investors have paid closer attention to the sums allocated to data centers and computing capacity, and to how they are financed. John Higgins of Capital Economics said investors had become more concerned about "the amounts they are collectively investing and how they are financing them" because the spending boom relies in part on external financing. Nasdaq data through October 28 show that the decline was not limited to the Composite: the semiconductor index was down 12% from its recent peak on October 6, compared with 5% for the Nasdaq 100 and 1.1% for the S&P 500. Even so, company results reported through October 23 were strong on expectations: 95% of 20 Nasdaq 100 companies beat earnings-per-share estimates, and 80% beat revenue estimates, according to Nasdaq Investment Insights.
Intel’s sharp loss came after the company said it expected to use cash during the year, citing weakness in the personal computer market, manufacturing hurdles and heavy spending to expand production, according to Reuters. The report said the stock fell more than 30% in early trading after the warning and was on track for its biggest one-day loss in its history before settling at a 28.6% decline in the session. This reflects a combination of pressures on the company: a weak PC market and operational challenges alongside the financing of a costly production expansion. Amazon shares, by contrast, showed a steadier response during the session, recovering much of their losses despite concerns about AI spending. EL7 data showed the shares closed at $238.44 on October 30, compared with $248 on October 23.
Investors’ review of corporate budgets coincided with a hawkish stance among some Federal Reserve officials. The central bank left interest rates unchanged at that week’s meeting, in a 10-to-2 vote, within a range of 3.75%-4.00%, according to Reuters. Lori Logan, president of the Federal Reserve Bank of Dallas, had said the bank needed at least two more interest rate increases, according to Reuters’ report on her remarks. Meanwhile, the yield on 10-year U.S. Treasury notes fell to 4.93% on October 30, from 4.98% at the previous session’s close, after exceeding 5.30% earlier in the month, according to the Associated Press. The drop in yields helped ease some financing pressure during the session, but did not prevent technology stocks from falling amid concern about corporate spending and its returns.
Attention turns on November 2 to the Institute for Supply Management’s manufacturing index, with TD Economics expecting a reading of 54.7 points, compared with a previous reading of 54.5. The index is due at 10:00 Eastern Time. These are forecasts listed in an economic calendar, not the index’s official reading. The calendar also listed Federal Reserve Bank of Chicago President Austan Goolsbee for a discussion at 11:15 the same day. Manufacturing data and central bank officials’ remarks will provide the next points for tracking investors’ assessment of the economy and interest rates, while the returns on AI spending remain in focus after October’s decline.