Stocks drop as Meta fans AI worries, Treasuries gain
A screen displays trading information outside the Nasdaq Market site in New York City, US, October 15, 2026. REUTERS/Shannon Stapleton
NEW YORK/LONDON, Oct 22 : Stock indexes fell on Thursday, after Meta's earnings report reignited worries about the AI boom's heavy capital spending, sending investors to the safety of US Treasuries.
Brent crude hit a five-month high following Houthi attacks in Saudi Arabia, which stoked concerns of further disruption to global energy supplies.
The Nasdaq, weighed down by chip stocks, fell 2.6 per cent in its biggest daily percentage drop since early June, while MSCI's All-World index was off 1.3 per cent.
Tech shares in Seoul, Tokyo, Amsterdam and Paris fell earlier.
Shares of Meta Platforms dropped 7 per cent after reported quarterly results on Wednesday. Meta's third-quarter revenue beat expectations, but the company said it would issue non-voting stock, a plan that revived concern over its mounting capital commitments and the heavy spend of AI hyperscalers more generally.
An index of semiconductors, among the biggest beneficiaries of AI spending, fell 6.7 per cent in its biggest daily percentage decline since June 23.
Shares of Tesla, which also reported earnings and cut its spending forecast, dropped 3.1 per cent. Reuters reported that some Tesla insiders are concerned that CEO Elon Musk's public comments on a potential merger with SpaceX could invite shareholder scrutiny and complicate deal talks. Shares of SpaceX ended down 9 per cent.
Investors' shifting views over AI spending have added volatility to the market. The Nasdaq's Thursday selloff followed a 1 per cent rally on Wednesday.
"To the extent investors believe that those (AI) earnings are real... they are buyers of these stocks," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
"But periodically, when they look at current earnings and the amount they're going to have to spend, they become concerned that these stocks are all overpriced."
TREASURIES GAIN IN SAFETY PLAY
US Treasuries rose, pushing yields lower, as the stock market's fall boosted the safe-haven appeal of government debt.
The yield on the benchmark US 10-year Treasury note was down 19.3 basis points at 4.953 per cent, its biggest daily drop since March 10, 2023. It has dropped since rising to 5.3645 per cent on October 7, highest since April 2002. Yields and prices move in opposite directions.
"They are rotating out of techs, out of the AIs, and into the more safety trades, whether it's bonds or some of those big Dow Jones stocks," said Joe Saluzzi, partner and co-head of equity trading at Themis Trading.
The Dow Jones Industrial Average rose 11.89 points to 52,867.98, the S&P 500 fell 93.74 points, or 1.2 per cent, to 7,663.43 and the Nasdaq Composite fell 694 points, or 2.6 per cent, to 26,008.86.
MSCI's gauge of stocks across the globe fell 14.95 points to 1,122.93, its biggest one-day fall since June.
The pan-European STOXX 600 index fell 1.05 per cent.
BRENT JUMPS ON ATTACKS
Houthi attacks in Saudi Arabia raised concerns of further disruption to energy supplies from the Middle East, pushing Brent oil up about 4 per cent.
Brent futures rose $4.35, or 4 per cent, to settle at $113.17 a barrel, while US West Texas Intermediate crude rose $2.32, or 2.4 per cent, to settle at $99.47.
Fragile equity markets also boosted the yen, while the dollar rose against the euro.
The Japanese yen strengthened 0.75 per cent to 156.96 per dollar. The euro was down 0.09 per cent at $1.1222.
CONCERNS CONTINUE FOR FRANCE
French markets were again hit on concerns over the country's strained public finances and ongoing street protests.
France's 10-year government bond yields surpassed equivalent US Treasuries for the first time since 2013, reflecting growing over France's deteriorating fiscal position and rising debt burden.
The benchmark 10-year yield was last up 6.5 basis points at 5.06 per cent.
The premium investors demand to hold French government debt over safe-haven German Bunds widened to its highest in 15 years.
