Last week was one of the roughest for technology stocks in months. On Friday, October 30, the Nasdaq Composite plunged 2.84% — its steepest one-day fall since early June — while the S&P 500 dropped 1.8% and the Dow fell 1.1%. By month's end, the Nasdaq 100 had lost more than $2 trillion in market value during October alone, falling over 5.8%, according to Reuters.
Why Big Tech Earnings Sparked the Selloff
The spark came from the giants' own quarterly results. Alphabet suffered its biggest one-day percentage drop on record after disappointing results in its core search advertising business combined with a sharp acceleration in cash spending on AI. Meta's plans for a record $97.5 billion fundraise raised fears of shareholder dilution. Intel plunged more than 30% after warning of a cash burn, deepening concerns about the cost side of the AI buildout.
It was not one-sided, though. Microsoft and SpaceX reported results suggesting their AI investments are starting to pay off — a reminder that the debate is about timing and returns, not whether the technology works. J.P. Morgan expects global AI capital spending to reach $900 billion in 2026 alone; Morgan Stanley forecasts infrastructure spending will surpass $1 trillion next year. The question is whether the companies spending this money can earn it back fast enough.
"More than $2 trillion in market value is set to be wiped from the tech-heavy Nasdaq 100 this month, as Big Tech earnings intensified investor scrutiny of whether the billions being poured into artificial intelligence can generate returns quickly enough." — Reuters, October 30, 2026
The Interest Rate Connection
There is a second force at work: the price of money itself. On October 28, the Federal Reserve held its benchmark rate at 3.75%–4.00% in a split 10–2 vote, with two policymakers preferring a hike. With September inflation running at 3.6%, markets now price roughly a three-in-four chance of another rate increase at the December meeting, and the 10-year Treasury yield touched about 5%. When borrowing costs rise, debt-funded megaprojects — like building out AI data centers — become harder to justify. Rising rates connect directly to market moves.
Key Takeaways
- Narratives drive prices — earnings test them: Markets can price in a great story (AI will change everything) for a long time, but every quarter the results have to support it. Understanding the gap between a story and the numbers behind it is one of the most valuable skills anyone learning money can build.
- Concentration cuts both ways: When a handful of companies dominate an index, their individual earnings can swing the whole market. Diversification is not just a buzzword — it protects you when one company's bad week threatens to become your bad week.
- Interest rates are the gravity of finance: The Fed's decision matters far beyond Wall Street — it shapes borrowing costs for businesses, which shapes the economy, which shapes stock and bond prices. Learning how rates connect to everyday money is foundational, not advanced.
Markets stabilized to start the new week: U.S. stock futures rose and Asian benchmarks advanced on Monday as investors reset for a new month and watched the U.S. midterm elections on Tuesday. For those building their money knowledge from the ground up, our Investing Fundamentals and Budgeting & Saving Basics courses cover how markets, diversification, and interest rates actually work — in plain language, no jargon.