US stocks closed out October with a sharp tech sell-off, as the Nasdaq Composite sank 2.9 per cent on Friday to its lowest finish since the end of July. The S&P 500 fell 1.8 per cent and the Dow Jones Industrial Average lost 1.1 per cent, capping a week in which disappointing earnings from some of the world’s biggest technology companies collided with expensive valuations.
Earnings that fuelled the tech sell-off
Alphabet set the tone earlier in the week when its quarterly results missed expectations, with earnings and advertising revenue coming in light and free cash flow deeply negative because of enormous capital spending. Amazon added to the gloom with weaker than expected numbers of its own, while keeping its full-year capital expenditure forecast at a staggering $220 billion. Reddit was among the day’s worst performers, falling around 29 per cent despite reporting a 53 per cent jump in revenue, a sign of how unforgiving this market has become. More background is in our business news section.
Energy and healthcare offer shelter
It was not red across the board. ExxonMobil and Chevron both beat profit forecasts as refining margins surged, with Exxon reporting its strongest result since the energy price spike that followed Russia’s 2022 invasion of Ukraine. Healthcare stocks, including biotechnology group Regeneron after a 36 per cent revenue increase, also gave investors somewhere to hide. As the market outlook analysis notes, the rotation out of growth and into value was one of the week’s defining features.
Forecasters split on what comes next
Wall Street’s strategists are divided. Goldman Sachs and UBS still see the S&P 500 reaching 8,000 to 8,100 over the next year, while Bank of America sits at the cautious end with a 7,400 target and Morgan Stanley warns of a possible dip toward 7,100 first. Third-quarter earnings overall have grown an estimated 30 per cent, with more than four in five companies beating expectations, which bulls say justifies optimism once the shakeout ends.
November therefore opens with a genuine debate: is this the correction that refreshes the bull market, or the moment the AI spending bill finally came due? The next few weeks of earnings and economic data should settle it.
