Wall Street trended lower on Thursday (October 29), with the Dow Jones falling 0.35% to 52,292.29, the S&P 500 dropping 0.32% to 7,719.52, and the Nasdaq Composite sliding 1.20% to 26,230.07 as of 11:49 a.m. U.S. time. The primary pressure stemmed from the technology sector, following an earnings report from Alphabet that reignited concerns regarding the soaring costs of artificial intelligence (AI) investments.
Alphabet shares plummeted after disappointing search advertising performance and increased AI spending placed further strain on the company’s cash flow. The Google parent company’s stock appeared headed for its largest single-day decline in history, serving as the main drag on the Nasdaq.
Microsoft also weakened following reports of a planned large-scale bond issuance. This fueled concerns that AI expansion is increasingly being financed through debt, heightening risks for companies at a time when borrowing costs remain high.
The semiconductor sector also faced pressure, while other major tech stocks saw mixed performance. Amazon shares dipped ahead of its earnings report, whereas Meta and Apple trended higher. Investors are beginning to question whether the massive expenditure on data centers and AI infrastructure will generate sufficient returns to justify current corporate valuations.
Despite the pressure on the technology sector, the weakness on Wall Street was not uniform. Eight of the 11 S&P 500 sectors actually posted gains, led by the healthcare and financial sectors. Eli Lilly surged after providing a strong annual revenue forecast, while Mastercard rose after reporting quarterly earnings that beat expectations.
Market sentiment was also influenced by U.S. economic data, which indicated an uptick in inflation for the month of September. Stronger-than-expected U.S. economic growth in the third quarter, combined with expectations of a Federal Reserve interest rate hike in December, has prompted investors to exercise greater caution regarding technology stocks, which are sensitive to interest rates.