Nasdaq drops 2.6% as AI spending doubts return; Brent oil closes at $113.17
In short
US stocks fell on 22 October (local time) as doubts about returns on AI investment returned, with the Nasdaq composite down 2.60% to 26,008.86 and the S&P 500 down 1.21%. The Dow Jones industrial average edged up 0.02%. Korean outlets also linked the move to a jump in oil prices on reports of renewed attacks on Iran after the US midterm elections.
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US stocks fell sharply on 22 October (local time) as doubts about AI investment returned, Korean outlets reported. The Nasdaq composite fell 694.00 points, or 2.60%, to 26,008.86. The S&P 500 fell 1.21% to 7,663.43, according to Yonhap, Newsis and Maeil Business, while the Dow Jones industrial average rose 11.89 points, or 0.02%, to 52,867.98. Newsis described the session as a mixed close. [ 1 , 2 , 3 , 5 ]
Maeil Business said the Nasdaq had its biggest fall since 23 June and the S&P 500 since 29 July. Chosun Ilbo said the Russell 2000 fell 0.20% to 2,775.60 and the CBOE volatility index rose 18.71% to 19.80. It said the Dow was supported by defence stocks and some consumer staples. Chosun Ilbo also said energy and nuclear-related stocks fell, including Talen Energy by 8.3%, Eaton by nearly 7%, Oklo by more than 4% and NuScale Power by more than 3%. [ 2 , 5 ]
Yonhap said big tech earnings reports raised doubts about whether the large sums going into AI will translate into profit. Chosun Ilbo said Meta reported third-quarter revenue of $64.6 billion after the previous day's close, against Wall Street's forecast of $63.37 billion, and gave a fourth-quarter outlook above expectations. It said the mood turned after Meta sharply raised its capital spending forecast. Meta shares fell 7% to 8% according to Chosun Ilbo, about 7% according to Newsis and 6.9% according to Maeil Business. Chosun Ilbo cited Bloomberg as saying Meta's credit risk gauge hit a record high. [ 1 , 2 , 3 , 5 ]
The sell-off spread to chips and AI-linked shares. Chosun Ilbo said the Philadelphia semiconductor index fell 6.7%, with Nvidia down 4%, AMD down more than 8% and Micron down 6%. Maeil Business gave declines of 4.40% for Nvidia, 8.10% for AMD and 6.26% for Micron. CoreWeave, which Chosun Ilbo called a leader among neocloud companies, fell more than 10%. Chosun Ilbo and Maeil Business said Nvidia CEO Jensen Huang told CNBC that demand for neocloud services was very strong but a lack of capital was holding back growth. Chosun Ilbo said Wells Fargo called this a surprise to the market. Chosun Ilbo also cited a Gartner warning that up to $3.5 trillion of investment spending could be stranded. [ 2 , 3 , 5 ]
Oil rose at the same time. Newsis said December Brent futures closed at $113.17 a barrel, up $4.35 or 4% and the highest since May, and December WTI closed at $99.47, up 2.39%. Newsis said the New York Times, citing anonymous US officials, reported that the US and Israel had made concrete plans to resume attacks on Iran after next month's US midterm elections. Chosun Ilbo described warnings that fighting in the Middle East could intensify after the elections. [ 2 , 3 , 5 ]
Maeil Business reported a move into safe assets. It said the 10-year Treasury yield fell 0.18 percentage points to 4.965%, below 5% for the first time since 23 September and the largest one-day drop since 10 March 2023, and the 2-year yield fell 0.17 points to 4.65%. It quoted Mitch Goldberg of ClientFirst Strategy as calling the move a flight to safety and saying investors were suddenly frightened by the size of AI-related companies' bond issuance. Chosun Ilbo said Alphabet, Microsoft and Amazon are due to report results next week. [ 2 , 5 ]
Why it matters
The outlets describe investors questioning whether heavy AI spending will produce profits, with Meta's higher spending forecast and Nvidia chief Jensen Huang's remarks about a shortage of capital as triggers. Maeil Business reported a rush into US Treasuries, with the 10-year yield falling below 5%. Several large tech companies are due to report results next week, according to Chosun Ilbo.
Key facts
- The Nasdaq composite fell 694.00 points, or 2.60%, to 26,008.86 on 22 October (local time), its biggest drop since June. [ 1 , 2 , 3 , 5 ]
- The S&P 500 fell 1.21% to 7,663.43 (Chosun Ilbo gave 7,663.45), while the Dow rose 11.89 points, or 0.02%, to 52,867.98. [ 1 , 2 , 3 , 5 ]
- Meta shares fell after the company raised its capital spending forecast, despite third-quarter revenue and an outlook above market expectations. [ 2 , 3 , 5 ]
- Nvidia fell about 4%, AMD more than 8%, Micron about 6% and CoreWeave more than 10%. [ 2 , 3 , 5 ]
- December Brent futures closed at $113.17 a barrel, up 4%, and WTI at $99.47, up 2.39%. [ 3 , 5 ]
- The 10-year Treasury yield fell 0.18 percentage points to 4.965%, according to Maeil Business. [ 5 ]
Confirmed by several sources
- The Nasdaq composite closed down 2.60% at 26,008.86, the S&P 500 down 1.21% and the Dow up 0.02% at 52,867.98. [ 1 , 2 , 3 , 5 ]
- The Nasdaq had its biggest daily fall since June, and the S&P 500 its biggest since July. [ 2 , 3 , 5 ]
- Doubts about whether AI investment will pay off drove the tech sell-off, with Meta's earnings as a trigger. [ 1 , 2 , 3 , 5 ]
- Meta rose in revenue above expectations but its shares fell, and Nvidia, AMD, Micron and CoreWeave also declined. [ 2 , 3 , 5 ]
- Nvidia CEO Jensen Huang said on CNBC that demand for neocloud services was very strong but a lack of capital was holding back growth. [ 2 , 5 ]
- Brent crude closed at $113.17 and WTI at $99.47 a barrel after reports that the Iran conflict could resume after the US midterm elections. [ 3 , 5 ]
Still unclear
- The exact S&P 500 close and change. Yonhap, Newsis and Maeil Business gave 7,663.43 (down 93.74 points per Yonhap and Newsis), while Chosun Ilbo gave 7,663.45 (down 93.72).
- The size of Meta's share-price fall. Chosun Ilbo said 7% to 8%, Newsis said about 7%, and Maeil Business said 6.9%.
- Whether the US and Israel have plans to resume attacks on Iran after the midterms. Newsis relayed a New York Times report citing anonymous US officials; no other document independently confirms it, and Chosun Ilbo described it only as a warning.
- Whether Meta's credit risk gauge reached a record. Only Chosun Ilbo reported this, citing Bloomberg.
- Houthi claims of four military operations against Saudi Arabia. Newsis reported the claim by the Yemeni rebels; it is not verified in the documents.
What local media are saying
Timeline, local time
- Yonhap published its report on the Nasdaq's 2.6% fall on AI investment worries. [ 1 ]
- Chosun Ilbo published a detailed report linking the fall to Meta's spending plans and Middle East tension. [ 2 ]
- Newsis published a report adding oil prices and the reported plan on Iran. [ 3 ]
- Maeil Business published a report adding the fall in Treasury yields. [ 5 ]