The Nasdaq 100 has fallen 10% from its October high, entering correction territory as chip and AI stocks sold off. Disappointing earnings from Amazon and Intel deepened the slide on Wall Street.
The Nasdaq 100 fell 10% from its October high, entering correction territory, according to a report by @FirstSquawk. Selling pressure hit chip and AI stocks in particular, coinciding with concerns over Alphabet's performance.
The index's fall below its 100-day moving average indicates a potential shift in market sentiment, the report said.
Tech earnings drive the sell-off
Wall Street slumped on Friday, dragged down by a steep slide in tech stocks. At 14:45 ET, the Nasdaq Composite slid 3.6% to 25,237.66 points, while the S&P 500 slumped 2.4% to 7,537.12 points.
On Thursday, Amazon missed quarterly estimates as its negative free cash flow ballooned amid elevated spending on AI. Intel shares plummeted over 31%, weighed down by sluggish demand for personal computer processors and supply chain snags for its critical data center chips.
Earlier in the week, Alphabet stock posted its worst intraday drop on record, losing roughly half a trillion dollars in market value. Meta's financials last week showed quarterly negative free cash flow for the first time in over a decade.
Worst month since March 2025
The hit to the AI trade means the Nasdaq Composite is headed for its worst month since March 2025. The S&P 500 is down 1.5% for October, but the Dow has bucked the trend, rising 1.4%.
Paul Stanley, managing director at Arca, said: "The AI trade is down, but not out."
The next big catalyst for Wall Street is the U.S. midterm elections on November 3.
Sources: Crypto Briefing, Investing.com
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