Nasdaq Plunges 2.6% as AI Spending Fears and Oil Surge Drive Broad US Market Selloff

Mumbai, 22 October 2026: US equities closed sharply lower on Thursday, with the technology-heavy Nasdaq Composite recording its worst session since June as renewed concerns over artificial intelligence spending and a surge in crude oil prices weighed on investor risk appetite. The Dow Jones Industrial Average defied the broader downtrend to finish marginally higher, while the S&P 500 posted its steepest daily decline since July. Treasury yields fell sharply as investors sought the safety of government debt, and energy prices climbed to multi-month highs amid heightened geopolitical tensions in the Middle East.

Nasdaq Composite Falls 2.6% as AI Spending Worries Trigger Broad Tech Selloff

The Nasdaq Composite opened at 26,308.41 and closed at 26,008.86, marking a loss of 694.00 points, or 2.60%. The index touched an intraday high of 26,359.41 and a low of 25,918.09 during a session dominated by selling pressure across semiconductor and AI-linked shares. The decline represented the technology-heavy benchmark’s worst single-day performance since June, as investors reassessed the capital intensity of the AI build-out and the timeline for returns on substantial infrastructure investments.

Weakness was concentrated in chip equipment and semiconductor names, which had been among the largest beneficiaries of AI-related spending optimism earlier in the year. Lam Research fell 11.76%, Applied Materials declined 8.18%, and Advanced Micro Devices dropped 8.13%. Micron Technology lost 6.26%, while Nvidia, the largest US company by market value, shed 4.40%. Intel declined 8.03%, and Broadcom fell 4.27%, reflecting a broad-based retreat across the semiconductor complex rather than isolated weakness in a single segment.

The selloff followed quarterly updates from major technology companies that did little to alleviate concerns about the scale of AI-related capital expenditure. Meta Platforms fell 6.97% despite reporting revenue that exceeded expectations, as the company’s plan to issue non-voting stock to fund its AI expansion revived questions about the financing burden borne by shareholders. Tesla declined 3.08% after cutting its annual capital expenditure forecast, raising uncertainty about the pace of its AI and robotics initiatives. CoreWeave, a neocloud provider whose debt profile has been closely watched, dropped 10.06% as worries over the cost of capital for debt-heavy AI infrastructure resurfaced.

The technology-heavy benchmark’s decline was partially cushioned by gains in consumer-facing and defensive names. Netflix advanced 3.14%, T-Mobile US rose 3.29%, and Costco Wholesale gained 2.04%. However, these advances were insufficient to offset the magnitude of losses across semiconductors and AI infrastructure shares, leaving the index firmly in negative territory at the close.

Dow Jones Gains 12 Points as Defensive Sectors Offset Sharp Technology Weakness

The Dow Jones Industrial Average opened at 52,788.41 and closed at 52,867.98, gaining 11.89 points, or 0.02%. The blue-chip benchmark traded within a range of 52,508.38 to 52,927.88 during the session, recovering from an early decline of more than 200 points to finish marginally above the flatline. The index’s resilience reflected its lower concentration in semiconductor and AI-linked shares relative to the Nasdaq, alongside strength in consumer staples, healthcare, and financial constituents.

Procter & Gamble was the strongest performer within the Dow, rising 5.59% after the consumer goods company reported fiscal first-quarter adjusted earnings of $2.00 per share on net sales of $23.28 billion, exceeding consensus expectations. The company also raised its full-year revenue growth guidance to a range of 2% to 4%, up from its prior outlook of 1% to 3%. Johnson & Johnson gained 3.83%, while Merck & Co. advanced 3.07%, contributing to the defensive tilt that supported the index. Home Depot rose 4.32%, and McDonald’s added 2.58%, as consumer discretionary names with domestic exposure attracted buying interest.

On the downside, Caterpillar fell 4.99%, and General Electric declined 0.81%, reflecting weakness in industrial names tied to broader economic sentiment. Chevron slipped 0.06%, and Coca-Cola gained 2.84%, highlighting the mixed performance across cyclical and defensive sectors within the price-weighted index. The Dow’s ability to close in positive territory while the S&P 500 and Nasdaq suffered sharp declines underscored the divergence in sector composition and the rotation toward defensive areas of the market.

S&P 500 Drops 1.2% as Chip Stocks Slide and Oil Prices Surge

The S&P 500 opened at 7,694.62 and ended at 7,663.43, losing 93.74 points, or 1.21%. The broad-market benchmark reached an intraday high of 7,702.94 and a low of 7,637.36, with the session’s decline representing its worst daily performance since July. The index’s losses were driven primarily by information technology and communication services, while consumer staples, utilities, and healthcare sectors provided partial offsets.

Within the benchmark, Lam Research was the weakest performer, falling 11.76% after issuing guidance that was broadly in line with consensus but lacked the upside surprise that investors had come to expect from semiconductor equipment makers during the AI spending cycle. Coherent declined 14.00%, and Lumentum Holdings dropped 11.00%, as optical component suppliers tied to AI data-centre build-outs came under pressure. Moderna was the worst-performing stock in the index, plunging 17.57% after partial data from its cancer vaccine trial leaked ahead of a scheduled medical conference.

Gains in defensive and dividend-paying sectors limited the index’s decline. Procter & Gamble rose 5.59%, Lockheed Martin gained 6.95%, and General Mills advanced 8.00%, while utilities and real estate investment trusts attracted safe-haven demand. The S&P 500’s decline was accompanied by a sharp drop in Treasury yields, as investors moved capital into government bonds and away from growth-oriented equities.

Russell 2000 Slips 0.1% as Small Caps Outperform Broader Market Decline Today

The Russell 2000 opened at 2,770.95 and closed at 2,777.97, losing 3.05 points, or 0.11%. The small-cap benchmark traded between 2,762.58 and 2,784.92 during the session, significantly outperforming the S&P 500 and Nasdaq Composite as investors rotated toward smaller companies with less direct exposure to the AI infrastructure trade.

Within the index, healthcare and biotechnology names showed relative strength, with Ensign Group rising 2.88%, Integer Holdings gaining 3.61%, and LivaNova advancing 3.61%. Financial institutions also performed well, as UMB Financial rose 2.46%, Valley National Bancorp gained 6.10%, and Associated Banc-Corp added 3.66%, benefiting from the decline in Treasury yields that reduced pressure on net interest margins. On the downside, TTM Technologies fell 27.58%, Carpenter Technology dropped 20.48%, and Advanced Energy Industries declined 12.49%, reflecting weakness in industrial and semiconductor-adjacent names.

S&P 100 Falls 1.1% as Large-Cap Technology Shares Lead Broad Market Retreat

The S&P 100 opened at 3,819.11 and finished at 3,849.76, recording a loss of 42.72 points, or 1.10%. The index traded between 3,785.32 and 3,824.59 during the session, with large-cap technology constituents accounting for the bulk of the decline.

Among the index’s most influential members, Nvidia fell 4.40%, Microsoft declined 2.12%, and Amazon dropped 4.53%, while Apple gained 1.26% and Alphabet slipped 3.15%. Meta Platforms declined 6.97%, and Broadcom lost 4.27%, reflecting the concentrated pressure on mega-cap technology and semiconductor shares. The S&P 100’s decline was shallower than that of the Nasdaq Composite, reflecting the presence of defensive and financial constituents that cushioned the impact of technology weakness.

Dow Transports Gain 1.9% as Railroads Offset Rising Airline Fuel Cost Concerns

The Dow Jones Transportation Average opened at 19,922.56 and closed at 20,294.43, gaining 371.87 points, or 1.87%. The index traded between 19,774.24 and 20,330.33, with railroad operators providing the strongest support. CSX advanced 7.00% after reporting a 30% increase in third-quarter profit to 57 cents per share and revenue growth of 12% to $4.02 billion, while Union Pacific rose 3.61% on pricing strength and higher fuel surcharge revenue. The Dow Jones Utility Average closed at 1,105.10, gaining 2.19% from its opening level of 1,085.69, as falling Treasury yields enhanced the appeal of dividend-paying utilities. The Dow Jones Composite Average ended at 16,560.58, up 0.68% from its previous close of 16,448.47.

Philadelphia Semiconductor Index Plunges 6.7% as Chip Equipment Shares Tumble Sharply Today

The Philadelphia Semiconductor Index (SOX) opened at 11,049.07 and closed at 10,731.98, losing 773.58 points, or 6.72%. The index touched an intraday high of 11,140.33 and a low of 10,666.40, narrowly avoiding a breach of its 200-day moving average at approximately 10,677. The decline was broad-based across chip equipment, memory, and logic manufacturers, with Lam Research falling 11.76%, KLA Corporation dropping 9.55%, and Applied Materials declining 8.18%. Marvell Technology lost 8.70%, and ON Semiconductor fell 8.99%, while Texas Instruments declined 1.81% and Qualcomm slipped 2.83%. The SOX’s decline came as investors reassessed the sustainability of AI-driven semiconductor demand and the capital spending plans of major cloud providers.

NYSE Composite Dips 0.1% as Financial and Industrial Shares Trade Broadly Mixed

The NYSE Composite opened at 24,273.57 and closed near 24,253.12, declining approximately 0.1% as financial and industrial shares traded mixed. The index traded between 24,103.23 and 24,284.57 during the session, with strength in consumer staples and utilities offset by weakness in energy and technology-related names.

Financial stocks were mixed, with JPMorgan Chase rising 0.39%, Visa gaining 1.59%, and Mastercard adding 1.64%, while Goldman Sachs fell 1.48% and Morgan Stanley declined 1.64%. Energy shares moved lower alongside crude oil price volatility, with Exxon Mobil slipping 0.12% and Chevron easing 0.06%, while industrial names including Caterpillar fell 4.99% and Deere gained 1.10%.

S&P MidCap 400 Falls 0.4% as Small-Cap Stocks Track Broader Market Lower

The S&P MidCap 400 opened at 3,641.90 and closed at 3,636.94, moving 29.00 points lower, or 0.79%, with an intraday range of 3,603.87 to 3,641.90. The S&P SmallCap 600 opened at 1,671.02 and ended near 1,686.53, gaining 10.89 points, or 0.65%, after trading between 1,665.86 and 1,687.14. The two benchmarks reflected divergent movements among mid- and small-cap shares, with the small-cap gauge benefiting from its greater exposure to domestic-facing financial and healthcare companies that outperformed on the day. Within the mid-cap benchmark, industrial and technology constituents faced pressure, while consumer discretionary and financial names provided support.

Oil Surge and AI Spending Fears Drive Sharp Treasury Yield Decline Broadly

The principal market catalyst was the combination of renewed concerns over artificial intelligence capital expenditure and a sharp increase in crude oil prices following reports that the United States and Israel were preparing for potential military strikes against Iran after next month’s mid-term elections. Brent crude futures settled at $113.17 per barrel, up 4.00%, while West Texas Intermediate rose 2.39% to $99.47 per barrel, reaching their highest levels since early May. The oil price surge added to inflation concerns and pressured consumer-facing and transport-related shares, while simultaneously benefiting energy producers.

Treasury yields fell sharply as investors sought the safety of government debt. The 10-year Treasury yield dropped more than 18 basis points to 4.965%, its lowest level in almost a month, while the 2-year yield declined more than 17 basis points to 4.65%. The 5-year yield fell 13.1 basis points to 4.820%, and the 30-year yield slipped 9.8 basis points to 5.317%. The yield curve flattened as short-dated yields declined more than longer-dated maturities, reflecting expectations that the Federal Reserve would hold interest rates steady at its upcoming meeting while acknowledging heightened economic uncertainty.

VIX Jumps 9% as Equity Volatility Rises Amid Sharp Technology Sector Selloff

The CBOE Volatility Index (VIX) rose approximately 9% to 18.25, compared with its previous close of 16.68, as demand for downside protection increased alongside the technology-led equity selloff. The VIX measures expected volatility in the S&P 500 over the coming 30 days, and its advance reflected heightened uncertainty surrounding AI spending, energy prices, and geopolitical developments. The index remained below its intraday high of 20.30 reached earlier in the session, suggesting that volatility moderated somewhat as the trading day progressed. The CBOE Nasdaq Volatility Index (VXN) also moved higher, tracking the sharper decline in technology-heavy indices.

Consumer Staples Gain 2.6% as Defensive Sectors Outperform Falling US Technology Stocks.

Performance across the 11 S&P 500 sectors was mixed, with defensive groups outperforming growth-oriented areas. Consumer Staples recorded the strongest gain at 2.6%, followed by Utilities at 1.3% and Health Care at 1.0%. Financials advanced approximately 0.4%, and Real Estate rose 0.45%, while Consumer Discretionary slipped 0.29% and Materials declined 0.37%. Communication Services fell 1.34%, Industrials dropped 1.69%, Energy declined 2.01%, and Information Technology posted the weakest performance with a decline of 3.12%. The sector movements reflected a clear rotation away from AI-linked growth shares toward defensive and dividend-paying areas of the market, driven by the decline in Treasury yields and heightened risk aversion.

Magnificent Seven Decline 3% as Meta and Tesla Shares Lead Daily Losses

Among the Magnificent Seven, Meta Platforms fell 6.97%, Tesla declined 3.08%, and Nvidia dropped 4.40%. Amazon lost 4.53%, Alphabet slipped 3.15%, and Microsoft declined 2.12%, while Apple was the sole member of the group to advance, gaining 1.26%. The group’s collective decline weighed heavily on the Nasdaq Composite and S&P 500, as these mega-cap technology companies account for a substantial share of both benchmarks’ market capitalisation. The divergence between Apple’s modest gain and the sharper losses among AI-focused members underscored the selective nature of the selling pressure within the technology sector.

Semiconductor and Energy Stocks Fall as Financial Shares Post Modest Gains Today

Semiconductor stocks were sharply lower, with the Philadelphia Semiconductor Index declining 6.72%, as chip equipment makers and memory producers faced aggressive selling. Financial stocks posted modest gains, with the financial sector rising approximately 0.4% as falling Treasury yields alleviated some pressure on net interest margins. Energy stocks moved lower alongside crude oil price volatility, with the energy sector declining 2.01% despite the surge in Brent and WTI benchmarks, as investors weighed the potential for demand destruction from higher fuel costs. AI and growth stocks were broadly lower, with movements among Nvidia, Meta, and Tesla contributing significantly to the technology-heavy indices’ declines.

Jobless Claims Fall to 194,000 as US Labour Market Remains Still Resilient

The latest economic data showed initial unemployment claims at 194,000 for the week, down 6,000 from the prior period and below the consensus expectation of 200,000. The reading marked the lowest level since mid-July, indicating that employers remain reluctant to reduce headcount even as hiring activity has slowed. Continuing claims rose 25,000 to 1.73 million, suggesting that some displaced workers are taking longer to find new employment. The releases provided the latest information on labour-market conditions during a session otherwise dominated by corporate earnings and geopolitical developments.

Treasury Yields Tumble as Investors Seek Safety Amid Sharp AI Stock Selloff

The Federal Reserve remained a key focus as markets assessed the likelihood of monetary policy adjustments at the central bank’s meeting later in October. The latest developments showed that markets were pricing a low probability of a rate increase at the upcoming meeting, while expectations for a December move remained present.

The 2-year US Treasury yield stood at 4.65%, while the 5-year yield was 4.820%. The 10-year Treasury yield stood at 4.965%, and the 30-year yield was 5.317%. The yield curve flattened as short-dated yields declined more than longer-dated maturities, reflecting the market’s assessment that the Federal Reserve would maintain a cautious stance amid heightened geopolitical and energy-price uncertainty.

Brent Crude Surges 4% to $113 as Middle East Tensions Escalate Again

Brent crude traded at $113.17, changing 4.00%, while WTI crude stood at $99.47, moving 2.39%. Gold traded at $4,040 an ounce, declining 2.6%, as rising oil prices and a stronger dollar reduced demand for the precious metal. Silver moved lower alongside gold, while copper declined amid concerns about global growth prospects.

The commodity moves followed reports of planned military action in the Middle East and attacks on Saudi Arabian energy infrastructure, which raised the prospect of supply disruptions and sustained upward pressure on energy prices.

Dollar Index Falls 0.2% as Yen and Euro Gain Against US Greenback

The US Dollar Index (DXY) moved 0.2% lower to 101.63, as investors sought alternative safe-haven currencies amid the equity market selloff. EUR/USD stood at 1.1232, USD/JPY traded at 156.828, and GBP/USD was at 1.3394. The yen strengthened against the dollar as risk aversion increased, while the euro benefited from a modest recovery in European bond markets. Currency movements followed the decline in US Treasury yields and the broader shift in risk appetite driven by AI spending concerns and Middle East tensions.

The closing session was shaped by renewed AI spending concerns and a sharp surge in crude oil prices following Middle East developments. The Nasdaq Composite fell 2.60%, the S&P 500 declined 1.21%, and the Dow Jones finished marginally higher, while Treasury yields dropped and the VIX rose to 18.25. Consumer staples and utilities outperformed, semiconductor shares plunged, and Brent crude settled at $113.17. These figures provide a factual summary of the session’s key market movements.