Nasdaq Leads Broad Market Decline

US stocks moved lower on Friday, with the Nasdaq Composite suffering the steepest decline among the major indexes. At 9:53 a.m. ET, the index had fallen 578.39 points, or 2.21%, to 25,606.33, putting it at its lowest level in nearly three months.

The S&P 500 declined 1.22% to 7,626.38, while the Dow Jones Industrial Average slipped 0.39% to 52,139.41. All three indexes were on course for weekly losses.

The technology-heavy Nasdaq was particularly exposed to concerns about the financial requirements of expanding AI infrastructure. Amazon’s spending plans and Intel’s cash flow warning intensified scrutiny of whether the industry’s substantial investments can generate sufficient returns.

Amazon and Intel Intensify AI Capital Spending Concerns

Amazon shares fell 2% after the company reported a sharp third-quarter cash outflow and indicated that capital expenditure would increase again next year. The announcement added to concerns about the scale of spending required to expand AI-related infrastructure.

Intel experienced a more severe decline, falling more than 30% and heading toward its largest single-day loss on record. The chipmaker warned that it expects to burn cash this year amid weak PC demand, manufacturing challenges and heavy investment in production capacity.

The pressure extended across the semiconductor industry. Nvidia declined 3%, AMD dropped 9.3%, and the broader semiconductor index lost 5.7%. Server manufacturers Dell and HP each fell approximately 9%.

If losses held, Amazon and Intel were expected to eliminate approximately $200 billion in combined market value. The Nasdaq-100 was on track to lose just over $1 trillion, while its October decline was projected to exceed $2 trillion.

Market strategist Art Hogan of B. Riley Wealth described the moves as a rotation away from an exceptionally popular technology trade and toward safer assets, rather than a broader market reset.

Defensive Sectors Gain as Technology Weakens

The S&P 500 information technology index was the market’s largest drag, declining 3.4% and heading for its sharpest one-day fall since June 23. Communication services lost 0.7% and was approaching its worst monthly performance since April 2022.

Alphabet shares declined another 1.2%, extending losses after the previous session’s record selloff. Investors continued to assess disappointing search-advertising results and increased cash outflows.

Microsoft provided a contrasting development, delivering a stronger-than-expected cash-flow performance, although the company also raised $25 billion through a debt sale.

Defensive sectors moved in the opposite direction. Consumer staples gained 1.9%, while healthcare advanced 1.7%, suggesting investors were reducing exposure to higher-growth technology shares.

Energy stocks also received support from Chevron and Exxon Mobil, which gained 1.7% and 2.7%, respectively, after both companies exceeded third-quarter profit estimates.

Interest Rate Expectations Add to Valuation Pressure

Expectations of higher borrowing costs added another layer of uncertainty. LSEG data indicated that markets anticipated the Federal Reserve could raise interest rates by more than 50 basis points by mid-2027.

The prospect of higher rates is particularly relevant as major technology companies increasingly rely on debt to finance infrastructure expansion. More expensive borrowing could make large-scale AI investment harder to justify, especially if revenue growth and cash generation do not keep pace.

The Federal Reserve held rates steady earlier in the week, as expected, but the longer-term interest rate outlook remains an important consideration for technology valuations.

Other individual stocks also experienced substantial declines. Reddit fell 26% after CEO Steve Huffman warned that total daily active unique visitors could decrease by a low double-digit percentage in the fourth quarter.

What Investors Should Watch Next

The immediate focus remains on whether major technology companies can demonstrate that AI infrastructure spending is translating into sustainable revenue growth and cash generation. Amazon’s capital expenditure outlook and Intel’s operating challenges have increased scrutiny of investment requirements across the sector.

Investors will also be assessing the relationship between financing costs and expected returns as interest rate expectations evolve. Meanwhile, the movement into consumer staples and healthcare suggests that portfolio positioning is becoming more defensive amid uncertainty surrounding technology earnings and capital allocation.

Market breadth reflected the pressure, with declining stocks outnumbering advancing shares by 1.31 to 1 on the NYSE and 2.4 to 1 on the Nasdaq. The Nasdaq Composite recorded 160 new 52-week lows against 51 new highs, highlighting the extent of the weakness beneath the headline index.