Market Overview
US equity markets closed sharply lower in the latest completed session, as technology shares experienced a significant sell-off driven by disappointing corporate earnings and growing investor scrutiny over artificial intelligence (AI) investments. The Nasdaq Composite suffered its steepest monthly decline since March 2025, reflecting broader concerns about the sustainability of the AI-driven equity bull market. The S&P 500 also retreated, breaching its 100-day moving average, while the Dow Jones Industrial Average showed relative resilience due to a rotation into defensive sectors. Separately, a record hack at cryptocurrency exchange Binance prompted a slide in Bitcoin.
Markets
The tech-heavy Nasdaq Composite (^IXIC) closed at 25,437.00, down 2.86%, marking its worst single-day performance since June. It concluded the month with its steepest monthly fall since March 2025, wiping out more than $US1.2 trillion in market capitalisation in October.
The broader S&P 500 (^GSPC) fell 1.82% to 7,580.07, breaching its 100-day moving average as the tech sector’s weakness weighed on the overall market.
In contrast, the Dow Jones Industrial Average (^DJI) declined by a more modest 1.09% to 51,770.31, but managed to add 1.7% for the month. This performance reflected a notable investor rotation into defensive sectors amidst the tech downturn.
In commodities, Brent Crude (BZ=F) closed at 112.30, down 2.25%, while WTI Crude (CL=F) rose 0.94% to 102.96. Oil prices generally faced upward pressure due to geopolitical concerns over potential US strikes against Iran.
The cryptocurrency market saw Bitcoin (BTC-USD) close at 76,876, down 1.16%, following reports of a record hack at Binance.
In bond markets, the 10-Year Treasury (^TNX) yield decreased by 6.00 basis points to 4.929%. The 30-Year Treasury (^TYX) yield also fell by 2.00 basis points to 5.309%. The Treasury market was set for its best month since February 2025, despite some commentary that higher energy costs reduced the bid for Treasuries.
Australian and major Asian equity exchanges are closed for the weekend. Implications from Friday’s US close will influence markets when trading resumes in the coming week.
What Drove Markets
The primary driver of the market’s downturn was intensified scrutiny on artificial intelligence (AI) investments and a string of disappointing tech earnings. Earnings reports and outlooks from Intel, Amazon, Alphabet and Meta heightened investor concerns about the cost of AI infrastructure, cash-flow pressures and the ability of these investments to generate sustainable returns. Intel’s slide of nearly 29% was its most in over four decades, following a weak outlook, while Alphabet shares posted their worst day on record earlier in the week, losing roughly half a trillion dollars in market value. This fueled a “reality check” for the sector, with analysts questioning the long-term viability and return on investment for the massive capital expenditures poured into AI infrastructure. Concerns also extended to the debt levels of “neoclouds” or cloud-computing companies supporting AI datacenters. Notably, “hyperscalers” Alphabet and Microsoft did not lift their capital expenditures forecasts for AI.
Amidst the tech sector’s struggles, investors showed a clear rotation into more defensive areas of the market. This shift helped temper losses for the broader Dow Jones Industrial Average, with gains observed in consumer staples and healthcare sectors. Oliver Pursche at Wealthspire Advisors noted that companies falling short of “lofty expectations are being sold aggressively,” while others remain investor favorites, emphasizing that investors are paying attention to valuation. This movement suggests a discerning market environment, where investors are scrutinizing real-world economics and looking beyond growth narratives. Matt Maley at Miller Tabak warned that this market “rotation” could easily disappear if major averages continue to drop, potentially leading investors to move into cash, especially given ongoing “bubble” discussions.
The cryptocurrency market faced renewed questions about customer asset security after Binance, the world’s largest crypto exchange, revealed a record hack. The hack involved $6.3 billion worth of funds, with about half frozen by stablecoin issuers. Binance has stated all losses will be covered and user funds are safe. Bitcoin fell on the news, highlighting ongoing vulnerabilities within the digital asset space.
Geopolitical risks contributed to oil-market volatility as investors assessed the possibility of renewed US strikes against Iran. However, the benchmarks diverged during the session, with Brent Crude declining 2.25% while WTI Crude gained 0.94%. The differing movements underline the importance of distinguishing geopolitical supply concerns from the actual price performance of individual contracts.
Stocks to Watch
Several key stocks experienced significant movements during the latest session:
- Intel (INTC) plummeted 28.58% to 65.76, its largest single-day fall in over four decades, following a weak outlook that served as a primary catalyst for the tech sell-off.
- Amazon (AMZN) fell 1.41% to 240.35 after third-quarter earnings disappointed investors, with negative free cash flow intensifying scrutiny of its heavy AI infrastructure spending.
- Alphabet (GOOGL) extended its losses, down 1.40% to 279.84, after posting its worst day on record earlier in the week due to missed earnings and negative free cash flow.
- Other chipmakers also came under pressure amid AI investment doubts: Advanced Micro Devices (AMD) dropped 10.88% to 504.80, NVIDIA (NVDA) was down 4.22% to 204.64, and Broadcom (AVGO) declined 5.48% to 326.08. Data storage company Sandisk (SNDK), despite beating estimates, fell significantly by 13.47% to 1,150.89.
- Microsoft (MSFT) decreased 1.55% to 521.91, despite maintaining its AI spending strategy and delivering solid Azure cloud growth.
- Meta Platforms (META) suffered a 1.53% decline to 614.99 after reporting negative free cash flow for the first time in over a decade and unveiling plans for a large equity fundraising to fund AI ambitions.
- “Neocloud” companies CoreWeave (CRWV) and Nebius (NBIS) were under heavy investor scrutiny over debt levels, with CoreWeave falling 9.66% to 54.87 (cratering 37% in October) and Nebius plummeting 10.38% to 154.14 (almost 35% down in October).
- In contrast, defensive stocks saw gains: Walmart (WMT) rose 1.86% to 123.51, Coca-Cola (KO) advanced 1.36% to 94.08, Merck (MRK) gained 2.18% to 149.52, and Amgen (AMGN) was up 1.15% to 466.01, helping to keep Dow losses in check.
- Chevron (CVX) advanced 1.75% to 235.52 after its third-quarter earnings exceeded expectations, outperforming the broader equity market despite Brent Crude’s 2.25% decline.