S&P 500 falls 1.2% as AI doubts hammer tech
Published on October 23, 2026
The S&P 500 dropped 1.2% on Thursday and the Nasdaq Composite fell 2.6%, its worst session since June. The reason is simple. Investors no longer trust that the billions being poured into artificial intelligence will turn into profits any time soon. The Dow Jones finished nearly flat, which tells you the damage is concentrated in tech.
Why the S&P 500 broke down on AI doubts
Anything tied to chips got hit hard. The semiconductor index lost more than 6% on the day, according to Saxo, and Meta sank more than 6% after its results. The move wiped out Wednesday's bounce in a single session.
The closing numbers, carried by the AP, show how narrow the damage was. The S&P 500 ended at 7,663.43 (-1.21%), the Nasdaq Composite at 26,008.86 (-2.60%), and the Dow Jones at 52,867.98 (+0.02%). The Russell 2000 actually gained 0.11%.
When one theme carries the indices, the whole market feels it the moment that theme wobbles. Matt Miskin of Manulife John Hancock Investments put it bluntly on Yahoo Finance Live, saying every index on the planet has basically become an AI index. Charlie McElligott, strategist at Nomura, described an AI trade now taking a real beating, Reuters reported.
The bond rally changed everything
Money rushed into Treasuries. The US 10 year yield fell more than 19 basis points, its sharpest one day drop since March 2023, settling near 4.96% and slipping back under the 5% mark. The 2 year dropped to 4.66%.
That reshuffles the Fed picture. Traders erased almost a full quarter point of expected tightening for next year, and the odds of a December hike fell to 85%. The target range still sits at 3.75% to 4.00% after September's increase. The FOMC meets Tuesday and Wednesday next week, and a hold is the clear favourite.
Do not extrapolate the move, though. Padhraic Garvey at ING is not convinced the 10 year keeps falling. A push back above 5% would put instant pressure on tech valuations again.
Oil at 114 dollars, the other weight on the indices
Brent trades near $113.95, up 0.7%, a five month high. WTI holds $100.31. Fears of fresh strikes on Iran and attacks in Saudi Arabia keep the risk premium alive.
For the indices, oil at this level creates one clear problem. It feeds inflation, so it makes the Fed's job harder at the exact moment the market wants lower rates. Mark Matthews, head of Asia research at Julius Baer, stays constructive on crude anyway and points out that demand still runs well ahead of supply.
The rest of the board fits the mood. Gold fell 0.5% to $4,004 and briefly traded under $4,000. Silver broke below $55, its weakest close in almost a year. Bitcoin is up 0.5% at $81,564 but still under $82,000. In Asia the Nikkei lost 1.3% and ends the week down 5%. US futures are steady this morning, with S&P 500 and Nasdaq 100 contracts both off 0.1%. Earlier sessions are collected in our market coverage.
Key levels today
| Instrument | Level (support / resistance) | Change | Scenario / what to watch |
|---|---|---|---|
| S&P 500 | Support 7,615-7,625, then 7,515-7,525 | -1.21% (Thursday close) | A close below 7,615 opens the way to 7,515 |
| Nasdaq 100 (futures) | Support 29,000, then 28,750-28,800 | -0.1% (Friday morning) | The 29,250-29,300 zone has broken and now acts as resistance |
| Dow Jones | Resistance 52,800-52,900, support 52,300-52,400 | +0.02% (Thursday close) | Above 52,900 the path opens toward 53,600-53,700 |
| Brent | Resistance $114.50-$115.00, support $105.92 | +0.7% (Friday morning) | Above $115 the pressure on yields comes straight back |
Levels taken from FXEmpire and FinanceFeeds.
Economic calendar
09:00 ET, euro zone flash PMI. Above 51, the euro can claw back some ground against the dollar. Below 50, the DAX and the CAC 40 slide into the US open.
09:45 ET, US flash PMIs. Forecasts are 55.5 for manufacturing and 58.0 for services, per Investing.com. If services print below 56, the market reads a real slowdown and long yields fall further.
10:00 ET, Michigan 1 year inflation expectations. Consensus is 4.7%. Above 5%, the harsher Fed scenario returns and tech takes the hit.
Next Wednesday, 14:00 ET, FOMC decision. A hold delivered with a hawkish tone would be enough to weigh on the Nasdaq.
Bottom line
The S&P 500 and the Nasdaq paid for doubts about whether AI spending will ever pay off, while the Dow Jones held its ground. Long yields and oil set the pace from here until next Wednesday's FOMC.
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This is not investment advice. Informational content only.