Chip stocks plunge, dragging down Nasdaq as October ends in a sell-off
US Morning Brief | Saturday, 31 October 2026 (Hong Kong time; cash market close was Friday, 30 October, US Eastern time)
On Friday, the S&P 500 fell 1.82% to 7580.07, the Dow fell 1.09% to 51770.31, the Nasdaq fell 2.86% to 25437.00, and the equal-weight S&P ETF (RSP) fell 0.79% to $218.31 (Reuters, republished). The 10-year US Treasury yield was about 4.93%, WTI crude was about $104.12 a barrel, gold futures were about $3885.70 an ounce, and the US Dollar Index was essentially flat (The Wall Street Journal).
Market theme
Friday's close delivered the verdict on this week's test: The market is no longer punishing companies for “not growing fast enough,” but for “spending too much and recovering cash too slowly.” The Nasdaq recorded its biggest one-day drop since June, and the Nasdaq 100 fell 3.46% to approach correction territory, while the S&P 500 fell only 1.82%, showing that this remains a reckoning concentrated within technology stocks rather than a market-wide capitulation. The fuse lit by Intel and Amazon's after-hours earnings reports turned into a broad chip-stock sell-off on Friday; meanwhile, oil prices surged and US Treasury yields fell, putting the inflation-versus-growth dilemma back before the Federal Reserve (Reuters, republished) (The Wall Street Journal). The one question facing markets over the weekend is whether Monday's Apple and Palantir earnings will halt the sell-off or extend the “cash-flow reckoning” to the last technology giants yet to report.
I. Stock and sector moves, including earnings: Chip stocks lead declines as energy stocks provide support against the trend
- Intel plunged 28.6% to $65.76, its biggest one-day decline since 1974, after its fourth-quarter revenue guidance fell far short of market expectations; the company also pointed to continued weakness in the PC market (The Wall Street Journal). Intel's fall best illustrates this week's logic: its current-quarter figures were not poor, but weak guidance brought a severe punishment. The market is now paying only for a company's willingness to make commitments about the next quarter.
- Chip stocks fell across the board: Nvidia dropped 4.2%, AMD fell 10.9%, and the Philadelphia Semiconductor Index lost 7.2%, taking its monthly decline above 15%; Dell fell 10.8% and HP dropped 9.6% (Reuters, republished). Amazon closed down just 1.4% at $240.35, substantially narrowing its premarket decline of around 7% (The Wall Street Journal). Amazon's narrowing losses alongside Intel's plunge draw the dividing line: cloud growth is still believed in, but no company can use a “growth story” to escape scrutiny of its cash flow.
- Reddit plunged 29.2% to $91.73, its biggest one-day decline since listing, after fourth-quarter revenue guidance came in below Wall Street expectations; Microsoft, Meta, Amazon and Alphabet also each fell between 1% and 2% on Friday, extending their losses for the week (The Wall Street Journal) (Reuters, republished). The declines in Reddit and big tech show that Friday's sell-off was no longer confined to AI infrastructure, but had spread to all high-valuation names with “overly ambitious growth expectations.”
- Energy and value stocks continued to buck the trend: Exxon Mobil and Chevron both reported better-than-expected third-quarter profits and rose 2.2% and 2.8%, respectively, as refining margins benefited from war-related supply disruptions; financial stocks were under pressure, with Goldman Sachs down 4% and Jefferies down 6% (Reuters, republished) (Reuters, republished). The combination of rising energy stocks and falling financials is a reminder that Friday was not simply a switch in risk appetite: investors were repositioning around oil prices, interest rates and the AI bill.
- Cryptocurrencies also came under pressure: Coinbase fell 11% to $143.54, and Bitcoin dropped 1.8% to $76353, following reports that hackers had stolen more than 6.3 billion dollars from Binance (The Wall Street Journal). News of the Binance theft combined with the technology sell-off added another layer to Friday's risk aversion: even the narrative around high-risk assets was losing ground.
II. Bonds, the dollar and commodities: Treasury yields fall as oil and gold move in opposite directions
- Friday's bond-market signal was clearer than that of equities: the 10-year US Treasury yield fell 6 basis points to 4.928%, while the 2-year yield fell 7.5 basis points to 4.579%, marking its biggest monthly decline since August; the 30-year yield fell to 5.309%. The Wall Street Journal said safe-haven buying offset inflation concerns arising from oil's return above $100 (The Wall Street Journal). The US employment cost index rose 0.8% quarter on quarter and 3.4% year on year in the third quarter, in line with expectations, giving the Fed neither fresh ammunition for rate increases nor greater room to raise expectations of cuts (US Bureau of Labor Statistics).
- Oil prices continued to rise: WTI gained 2.1% to $104.12 a barrel, its highest close since mid-September, as an attack on a tanker in the Strait of Hormuz and a claimed Houthi attack on Saudi facilities intensified concerns about Middle East supply (The Wall Street Journal). Oil is rising because of supply risk, not demand—and that is what makes it so difficult to manage: the higher oil goes, the harder it is to rule out a rate increase in December, and the more fragile safe-haven buying in the bond market appears.
- Gold futures fell 3.3% to $3885.70 an ounce, 27% below their January peak; silver futures have fallen 57% from their peak earlier this year (The Wall Street Journal). Reuters said higher oil prices and strong US inflation data supported expectations of another Fed rate increase later this year, with traders currently putting the probability of a December increase at about 75% (Reuters). Gold and US Treasuries both fell on the same day, breaking the simple “buy gold for safety” script: when inflation expectations and selling appear together, gold is first sold as a source of liquidity rather than treated as a haven.
- In currency markets, the dollar was broadly flat against major currencies, as the Fed's dovish stance and a wave of risk aversion offset each other (The Wall Street Journal). The dollar's flat performance shows that Friday's sell-off had not yet become a dollar crisis: money was seeking shelter in US Treasuries rather than the dollar itself.
III. AI highlights: Cash burn remains the main theme as financing becomes a second battleground
- The Wall Street Journal said markets were starting to question whether the technology pullback could turn into the bursting of a speculative bubble: Alphabet and Amazon posted revenue growth far above historical averages and only slightly below Wall Street expectations, yet their shares still fell sharply (The Wall Street Journal). A sharp fall on a slight miss shows that valuations leave no room for error: good earnings are merely a passing grade, while a beat is the ticket to survival.
- Another underlying theme is financing: CoreWeave fell 9.7% to $54.87, less than $4 above its low for the year, while credit derivatives tied to its data-center debt had already sounded a warning; views cited by The Wall Street Journal summed up this week's debate in two camps—bears say hyperscalers are spending too much, earning too little and borrowing to fill the gap, while bulls point to chipmakers' AI orders still growing exponentially, with visibility stretching years ahead (The Wall Street Journal). The two camps are not actually contradictory: the orders can be real, and so can the bills. The market is debating whether orders can be monetized fast enough to outpace bills coming due.
- For the month, the Nasdaq suffered its biggest monthly decline since March 2025, falling 5.3% in October; the S&P 500 fell 0.9% for the month, while the Dow rose 1.7%; the Nasdaq was down 7.8% from its 6 October closing high, and the Nasdaq 100 was approaching correction territory (The Wall Street Journal) (Reuters, republished). Earnings season is more than halfway through, with 299 S&P 500 companies having reported, of which 82% beat expectations; analysts expect overall third-quarter earnings to grow 31.6% year on year (Reuters, republished). Earnings beats are commonplace, yet shares still fall. That is the week's most memorable lesson: earnings season is not about whether there is growth, but whether growth is enough to pay the AI bill.
IV. Calendar ahead (Hong Kong time)
- Monday, 2 November, 23:00: US ISM manufacturing PMI for October; after the close (early 3 November Hong Kong time): Apple and Palantir report earnings (Morningstar).
- Tuesday, 3 November: AMD reports earnings after the close; US midterm elections (Independent Investor).
- Wednesday, 4 November: US ISM services PMI for October; Arm and Qualcomm report earnings (Independent Investor).