The S&P 500 Index ($SPX) (SPY) fell -1.21%, the Dow Jones Industrial Average ($DOWI) (DIA) rose +0.02%, and the Nasdaq 100 Index ($IUXX) (QQQ) fell -2.90%. December E-mini S&P futures (ESZ26) fell -1.18%, and December E-mini Nasdaq futures (NQZ26) fell -2.79%.
A heavy bout of risk-off selling pushed both tech stocks and the broad market lower. Investors resumed dumping chip and AI-related stocks, and the broad market fell as investors reduced stock exposure and covered losses. Gold and crypto are also fell as investors licked their wounds and raised cash. Bond prices benefited, with the 10-year T-note yield plunging -16 bp.
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Tech stocks led the charge lower on fresh unwinding of chip and AI-related stocks. Meta (META) fell -7% even after CEO Zuckerberg said the company’s AI investment is starting to pay off. Tesla (TSLA) fell -3.1% after trimming its capex plans. Lam Research fell more than -11 after the chip company delivered disappointing guidance.
Stocks were also undercut by a +2.2% rally in WTI oil prices on Middle East tensions after there were several attacks in the past two days by the Houthi militia on targets in Saudi Arabia, including an oil field, a port, and an airport in Dammam. The US State Department also said Wednesday afternoon that it was evacuating non-essential personnel and families from Saudi Arabia.
The Saudi evacuation sparked some market speculation that the US might be planning a new wave of attacks on Iran and/or the Houthis after the November 3 election. Indeed, the New York Times reported Thursday that the US and Israeli militaries have developed specific plans for renewed military strikes against Iran after the US and Israeli elections, although the report said President Trump has not yet approved those plans. The goal of a new military attack would be to deliver a knockout punch to Iran that would topple the government or at least force Iranian leaders to capitulate to US demands, although that has so far only been a fever dream of US planners.
Stocks are supported by the prospect of solid quarterly earnings. According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +25% from a year earlier, up from a July estimate of 22%. As of Thursday, 113 of the S&P 500 companies have reported results, with 80% beating estimates.
Markets are discounting a 7% chance of a +25 bp Fed rate hike at next week’s FOMC meeting on October 27-28.
Overseas stock markets closed lower on Thursday. The Euro Stoxx 50 fell -1.94%. China's Shanghai Composite closed down -1.48%. Japan's Nikkei-225 Stock Average closed sharply lower by -2.65%.
Interest Rates
December 10-year T-notes (ZNZ6) rose by +1-07/32 points. The 10-year T-note yield fell sharply by -15.6 bp to 4.963%. T-note prices saw safe-haven demand tied to the sharp sell-off in stocks and increased tensions in Saudi Arabia as the US State Department evacuates non-essential personnel. Also on the bullish side, the 10-year breakeven inflation expectations rate fell -3.2 bp to 2.336%. The odds of a Fed rate hike at its meeting next week fell to 7% from 15% on Wednesday.
European government bond yields fell. The 10-year German bund yield fell -7.9 bp to 3.342%. The 10-year UK gilt yield fell -4.6 bp to 5.332%.
Markets are discounting a 2% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
The Magnificent Seven all fell on Thursday, except for Apple (AAPL), which closed up +1.3%. Aside from the sharp sell-off in Meta, Amazon (AMZN) and Nvidia (NVDA) fell more than -4%. Tesla (TSLA) fell -3.2%, Alphabet (GOOGL) fell -2.9%, and Microsoft (MSFT) fell -2.1%.
Meta (META) fell -7% after the company, in its earnings report Wednesday afternoon, raised its target to $825 billion from $700 billion of future spending commitments, mostly related to computing power and AI-related infrastructure. The higher spending plans were positive for companies that deliver those services but raised questions about whether Meta will achieve a sufficient return for investors on that massive investment level. The company also announced a new class of nonvoting stock that could be used to raise more capital, although that could dilute earnings per share for current investors. Revenue and earnings were better-than-expected, with Q3 revenue rising +26% to $64.6 billion and earnings of $3.83 a share beating the $3.57 consensus.
Tesla (TSLA) fell -3.2% after Wednesday afternoon’s mixed earnings report and concerns about the company’s lagging capex investment. Q3 revenue of $28.05 billion was down -0.2% y/y and was slightly below the consensus of $28.13 billion. Q3 adjusted EPS of 48 cents/share was better than the consensus of 44 cents. Tesla’s self-driving subscriptions rose +67% y/y to 1.74 million, above expectations of 157 million. Tesla’s main bullish driver this week was Elon Musk’s attempt to force a merger of SpaceX and Tesla, folding Tesla's mixed prospects into the bigger SpaceX rocket-and-AI theme.
LAM Research (LRCX) fell more than -11% after its guidance for adjusted fiscal Q2 earnings was slightly weaker than expected. The negative Lam news helped lead to a broad sell-off in chip stocks, with KLA (KLAC) and GlobalFoundries (GFS) down more than -9%. Marvell Technology (MRVL), Intel (INTC), and AMD (AMD) fell more than -8%.
Crypto stocks fell, with Bitcoin’s sell-off of -3.9%. Galaxy Digital (GLXY) fell -9.5%, Iren Limited (IREN) fell -8.6%, and Riot Platforms (RIOT) fell -8.0%.
IBM (IBM) spent most of the day on the downside but closed slightly higher. Its earnings report raised doubts about its growth sustainability, even though the company’s IT services results improved.
Procter & Gamble (PG) rallied more than +5% on above-consensus sales and earnings and relief that the company’s limited price hikes didn’t put a bigger dent in earnings.
Spotify Technology (SPOT) rallied more than +11% after earnings and guidance suggested improving profit margin trends.
Las Vegas Sands (LVS) fell more than -2% on disappointing earnings.
Earnings Reports (10/23/2026)
Booz Allen Hamilton Holding Co (BAH), First Citizens BancShares Inc/ (FCNCA), Gentex Corp (GNTX), First Hawaiian Inc (FHB), Rithm Capital Corp (RITM), American Express Co (AXP), SLB Ltd (SLB).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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