One day after a broad rally, Wall Street's mood flipped on Thursday, Oct. 22, as worries about how much Big Tech is spending on artificial intelligence sent the Nasdaq to one of its worst days in months, while the Dow barely budged.
The swing is a reminder that two investors can have very different weeks depending on what they own. Someone with a tech-heavy fund likely felt Thursday's drop; someone with a more balanced mix may have barely noticed.
What happened in the stock market on Oct. 21 and Oct. 22?
On Thursday, Oct. 22, the Nasdaq Composite fell 694 points, or 2.6%, to 26,008.86, and the S&P 500 dropped about 1.2% to roughly 7,663. The Dow ended essentially flat near 52,868, per Yahoo Finance. All three indexes had risen on Wednesday, Oct. 21.
Wednesday was a good day. The Dow climbed 360.21 points, or 0.69%, to 52,856.09, the S&P 500 gained about 0.6% and the Nasdaq rose about 1%, led by chipmakers, according to Yahoo Finance's Oct. 21 market coverage. Strong results from SpaceX, which closed up 7.79%, and a raised sales forecast from Super Micro helped revive enthusiasm for AI stocks. AT&T fell about 6% on worries about SpaceX's Starlink mobile plans, and Netflix slid after a weak revenue forecast.
Why did tech stocks fall so hard on Thursday?
The trigger was Meta Platforms. The Facebook parent beat revenue expectations late Wednesday, but it also reported negative quarterly free cash flow, meaning it spent more cash than its business brought in, driven by nearly $35 billion in capital spending, according to Investing.com. Meta also proposed a new class of nonvoting shares to help fund its AI build-out. The stock slid about 7% on the day.
That news reopened a debate investors have had for weeks: will the hundreds of billions going into data centers and chips pay off? Other giants fell with Meta. The Associated Press reported that Nvidia was the heaviest drag on the S&P 500 at midday, and Lam Research dropped about 10% after its guidance came in slightly below expectations. Reuters reported that the Philadelphia semiconductor index plunged 6.3% during the session, on pace for its worst day since June 23.
"This is the most widespread selling of the AI trade we have seen all year," Michael O'Rourke of…
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Compound growth estimate
Estimated total
$17,175
Your contributions
$13,000
This is an estimate, not a prediction. Monthly compounding; taxes, fees and inflation are excluded.
This article is for educational purposes only and isn't personalized financial, tax or legal advice. Consider talking with a qualified professional about your situation.
Kiara Miller — Founder & Editor
Kiara Miller is the founder and editor of The Evergreen Edit. He has been doing independent finance research for two decades and reviews every article before it's published.
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