Why Did Nasdaq Fall Oct 22, 2026? AI Spending

What Happened

The Nasdaq Composite fell 2.6% to 26,008.86 on Thursday, its worst day since early June, as renewed worries about AI spending hit big tech after Meta and Tesla earnings. The S&P 500 lost 1.21% to 7,663.43, its worst day since July, while the Dow Jones Industrial Average finished flat, up 0.02%. Meta Platforms fell about 7% even though its revenue beat forecasts, because it reported its first cash outflow in more than a decade from AI spending and announced non-voting shares in a 2-for-1 split to raise money. Tesla cut its yearly capital spending forecast. The Philadelphia Semiconductor Index fell 5.6% to its lowest level since July 29.

Why It Matters

Investors are now asking how much AI spending will pay off, not just how strong sales are. That question is at the center of the debate over whether we are in another AI bubble. The weakness in big tech masked gains in much of the rest of the market.

Market Impact

What Happened

The US 10-year Treasury yield fell about 17 basis points to 4.95% on Thursday, dropping below 5% for the first time since September 23, as investors bought government bonds while tech and AI shares fell. Investors treated Treasuries as a safe place to park money. Five- to 30-year yields reached their lowest levels in nearly a month. Bond prices rise when yields fall (see our glossary for more).

Why It Matters

Bonds acted as a haven even with oil prices higher. Falling yields lower borrowing costs, which is why homebuilders gained, though a frozen housing market depends on more than one day's move in yields.

Market Impact

What Happened

December West Texas Intermediate crude futures rose back above $100 a barrel in Asian trading on October 22, and Brent traded around $109, on reports of possible US and Israeli strikes on Iran. Reports said the US and Israel are weighing a three-day air campaign against Iran after next month's US midterm elections. Iran warned it could hit Gulf oil facilities, including Saudi Aramco sites. Brent jumped 27.9% in a single week when attacks began last February.

Why It Matters

Higher oil prices feed into gasoline and shipping costs. That makes inflation harder for the Federal Reserve to bring down. For background on how war risk moves crude, see our explainer on oil prices during war and the Strait of Hormuz.

Market Impact

What Happened

US weekly jobless claims fell by 6,000 to 194,000 in the week ended October 17, a three-month low, the Labor Department reported, below the 200,000 economists expected. The prior week's figure was 200,000. Claims are near 57-year lows. Prediction markets priced a 91.5% chance of no Fed change on October 28 and an 8.5% chance of a quarter-point hike.

Why It Matters

A steady job market gives the Fed less reason to change interest rates quickly. Layoffs are still low even as inflation stays high. New to the topic? Read what the Federal Reserve does and how it sets rates.

Market Impact

What Happened

Lockheed Martin shares rose about 7% on Thursday after the defense contractor reported earnings, and Spotify rose 9% after its report, as parts of the market held up during the tech slide. The gains came as the Dow stayed flat while the Nasdaq fell 2.6%. Tesla ended down about 3% in late trading.

Why It Matters

The selloff was concentrated in AI-linked tech stocks. Other sectors, including defense and homebuilders, moved on their own news.

Market Impact