Tech stocks lead the decline

On Friday, 23 October, US indices were mostly lower in afternoon trading in Europe, with the Dow Jones Industrial Average nearly 1.5% down at 52,096 points, the S&P 500 down 0.6% at 7,615 and the Nasdaq 0.4% lower at 25,934. The losses followed a sharper session on Thursday, 22 October, when the Nasdaq 100 fell 2.9% and the Philadelphia Semiconductor Index sank 6.7%, their biggest declines since late June. On that day the S&P 500 fell 1.2% and the Nasdaq Composite lost 2.6%, although most US stocks actually rose. Asian shares followed Wall Street lower, with Japan's Nikkei 225 down 1.7% and South Korea's Kospi down 2.4% in early trading on Friday.

Investors question the cost of AI

Sentiment toward AI leaders has shifted from earnings to spending. Several large technology groups posted good quarterly figures but also announced they would put more money into AI, and investors fear those outlays will weigh on future profits and take a long time to pay off. Meta fell about 7% on Thursday after its revenue beat expectations while profit fell short, and the company said it would create a new class of stock to raise money for AI investments and other expenses. Meta plans to spend at least 135 billion dollars on its AI infrastructure this year, and the company's advertising business is funding the buildout. Doug Anmuth of JPMorgan described the quarterly numbers as good in a first reaction.

“The market is still ready to reward high investment in AI, but it sets ever higher demands on returns.”

Santiago Mateo, head of equities at CaixaBank AM, said investors now want proof that spending turns into stronger growth, better monetisation and eventually profit. Brendon Dashiell, portfolio manager at Bogart Wealth, said that high valuations make AI stocks vulnerable, so that even a small setback in the market can lead to a sharp fall in their share prices.

Chips, debt and oil

Nvidia fell 4.4% in the Thursday session, and as the largest company on Wall Street by total value it had more influence on the S&P 500 than any other stock. CoreWeave, which borrowed money to buy Nvidia chips it rents out over the cloud, dropped 10.1% amid worries about its debt. Tesla fell 3.1% after a stronger profit than analysts expected, though its revenue was weaker than forecast.

Meta Platforms-7%

Nvidia-4.4%

Tesla-3.1%

CoreWeave-10.1%

Meta Platforms

-7 %

Nvidia

-4.4 %

Tesla

-3.1 %

CoreWeave

-10.1 %

Data from the article text

South Korea's SK Hynix scrapped an initial public offering for its US subsidiary Solidigm after facing shareholder opposition. Oil prices rose on worries about the war with Iran and deadly attacks in Saudi Arabia, with Brent crude at about 113 dollars per barrel. Sources give 113.10 dollars and 113.73 dollars, and the Independent reported that prices were at their highest since May.

Bonds gain as havens

The rout drove investors into Treasuries, which staged their biggest rally in more than two years. The benchmark 10-year yield fell 17 basis points to 4.95%, and the yen outperformed its major peers. Eugene Leow, senior rates strategist at DBS Bank, said investors may want to hedge some of these risks by seeking safety in government debt.

“Sentiment seems to be shakier these days as investors reconsider AI-related assets.”

The Nasdaq 100 volatility index stood at 29 according to LSEG data, above its twelve-month average of 24, though Thomas Altmann of QC Markets said the market was not in panic, noting that the index reached nearly 40 in April 2025. Taiwan's stock exchange was closed on Friday because of a typhoon. The next test comes next week, when Microsoft, Amazon.com and Alphabet report results alongside the Federal Reserve's policy decision.