Tech Sell-off Drags U.S. Markets Toward October Loss

U.S. equity markets entered Friday trading with a narrow margin above their all-time highs, a position that left them vulnerable to sharp corrections in high-growth sectors.

Selling accelerated across technology stocks on Friday, pushing the S&P 500 down 1.9% and placing the index on track to close October lower despite setting a record high earlier in the month. The Nasdaq Composite fell 3.1% as of 1:20 p.m. Eastern time, heading for its steepest daily drop since June. The Dow Jones Industrial Average lost 511 points, or 1%, as tech weakness outweighed gains in other sectors.

Three primary factors drove the decline in tech shares. First, Intel fell 30% to its lowest level since 1974 after forecasting fourth-quarter profits below analyst estimates. CEO Lip-Bu Tan stated that the personal-computer industry continues to face pressure, a comment that weighed on the stock even though the company reported higher-than-expected profits for the prior quarter. Second, Amazon dropped 2.1% after revealing it burned through $42.4 billion in cash over the past 12 months. The company spent $94.8 billion on property and equipment, largely for artificial intelligence technology, while reporting weaker summer profits than expected. Third, Nvidia, the leading beneficiary of the AI buildout, fell 4.8%, exerting the heaviest downward pull on the S&P 500, surpassing the impact of Intel's drop.

Investors are questioning whether the hundreds of billions of dollars invested in AI infrastructure will generate sufficient returns. This skepticism arrived days before Tuesday's midterm elections, a period when President Donald Trump has historically cited market performance as a gauge of economic success. Joe Tigay, a portfolio manager at Equity Armor Investments, noted in a client message that the market is transitioning from a phase of optimism to one requiring proof of performance.

The selling extended to the cryptocurrency sector following a security breach at Binance, the world's largest crypto exchange. A U.S.-based blockchain intelligence firm attributed the attack, which affected more than $6 billion in assets, to a North Korean unit. Bitcoin prices fell toward $77,000 from above $86,000 earlier in the month. Coinbase Global shares dropped 13.4% and Strategy shares fell 8.7%, despite both companies reporting quarterly profits that exceeded analyst expectations. Strategy also announced that its chief financial officer would resign next week for personal reasons.

Non-technology stocks showed greater resilience, with nearly as many S&P 500 components rising as falling. Energy and consumer staples firms benefited from strong earnings reports. ExxonMobil rose 2% and Chevron gained 1.7% after both oil majors posted summer profits above forecasts. Mondelez International, maker of Oreo cookies, climbed 3.9% on better-than-expected growth, while Colgate-Palmolive gained 3.6% after higher global product prices boosted revenue.

In bond markets, investors moved into U.S. government debt, causing the 10-year Treasury yield to fall to 4.94% from 4.98% late Thursday. The yield had been above 5.30% earlier in the month. This decline occurred even as Brent crude oil prices rose 3% to $114.11 per barrel, a level near the high end of the range seen since the war with Iran began.

Global markets mirrored the U.S. weakness, with European indexes mostly lower after volatile sessions in Asia. South Korea's Kospi index dropped 3.5% as AI concerns hit its tech-heavy market. Japan's Nikkei 225 fell 2.1% after the Bank of Japan held interest rates steady, following similar decisions by the Federal Reserve and the European Central Bank earlier in the week. The Hang Seng index in Hong Kong was an exception, rising 1.5%.