The Nasdaq Composite fell 2.60% to 26,008.86 on Thursday, its worst day since early June, according to Reuters’ closing report. The Nasdaq selloff dragged the S&P 500 down 1.21% to 7,663.43.
Reuters’ Trading Day column pegs the damage at roughly $1 trillion in market value wiped off the Nasdaq in a single session. Our look at how $1 trillion vanished in four days covers the bigger picture.
What the AI stock selloff means for your money
Here’s the thing: if you own an index fund, you own a lot of this trade. Tech makes up a heavy share of the market. A bad day for AI stocks therefore drags the whole index down, even when most companies are fine.
About 83% of S&P 500 companies reporting so far have beaten expectations, per LSEG data cited by Reuters. Good earnings still did not save the biggest names.
Higher rates could add pressure too, as we explain in our piece on how rate hikes may spare Amazon and Apple.
Why the tech selloff hit so hard
Two earnings reports lit the fuse. Meta beat analyst expectations, yet its stock still fell 7.0%.
The reason was the bill for AI. The company posted its first cash outflow in more than a decade because of AI spending. It also announced plans to issue non-voting shares in a two-for-one split to raise capital for more AI.
Tesla told a different story and got the same result. The company unexpectedly posted positive free cash flow and trimmed its 2026 capital spending plans. Its shares fell anyway, per Reuters. Heads they lose, tails they lose.
“Investors are starting to realize that there are some holes in the AI story,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest.
Chips took the worst of the Nasdaq drop
The chip sector felt it most. Reuters’ column has the Philadelphia Semiconductor Index down 6.7% on the day. Intel, AMD, Sandisk and Marvell each dropped more than 8%. Amazon and Nvidia each slid about 4.5%, and Moderna fell 18%.
The index is now off more than 26% from its June 22 record close. It is still up 51.5% so far this year, against 11.9% for the S&P 500.
That gap shows how much of the market’s gains rode on one theme. It also explains why this Nasdaq slide stung so badly.
The rest of the market barely noticed
Here is the odd part. The Dow actually edged up 11.89 points, or 0.02%, to 52,867.98. Five S&P sectors fell, but six rose, and utilities gained about 2%.
Union Pacific climbed 3.6% after an earnings beat, even as it flagged a hit from rising fuel prices. Procter & Gamble also beat estimates and rose sharply, though it warned that rising costs would increasingly hurt profit.
Nolte’s point was that only tech was suffering. Breadth backs that up. On the Nasdaq, 2,766 stocks fell while 2,022 rose. In other words, this Nasdaq selloff stayed mostly in one corner of the market.
The week was already rough. On Oct. 16 the Nasdaq slid 2.1% and ended its four-week winning streak, Yahoo Finance reported. The 10-year Treasury yield touched 5.33% after hot inflation data before easing to around 5.09%.
What to watch after the Nasdaq selloff
More big-tech earnings are likely soon, and investors will listen closely for AI spending plans. Our preview of Wall Street’s big AI test for Meta, Tesla and SpaceX covers what to expect.
The question hanging over the market now is simple. When the biggest companies in the world spend like this, who exactly is supposed to pay them back?
