A fresh wave of selling in chipmakers and artificial-intelligence stocks pushed the Nasdaq 100 into a technical correction on Monday, even as the Dow Jones Industrial Average finished higher. The split verdict left Wall Street in a cautious mood on Tuesday, with Americans voting in the midterm elections and traders bracing for more earnings and a closely watched jobs report later this week.
A market pulling in two directions
The Nasdaq 100 fell 1.39% to 27,989.82, closing 10.4% below the record it set on October 6. By convention, a decline of 10% or more from a peak is called a correction, and Monday was the index’s first close in that territory since late July. The broader Nasdaq Composite lost 1.07% to 25,164.32, while the S&P 500 slipped 0.51% to 7,541.40.
The Dow told a different story. The blue-chip average added 213.67 points, or 0.41%, to end at 51,983.98. It was helped by a sharp fall in oil prices and by money moving out of expensive technology shares and into more traditional, value-oriented corners of the market. Rotations like this are common when investors turn nervous. They do not necessarily leave equities altogether, but they reshuffle what they hold.
Intel sets the tone for the chip rout
The pressure began with semiconductors. The Philadelphia Semiconductor Index dropped 3.4% on Monday to its lowest close since late April, extending a three-day slide of roughly 12%.
Intel sat at the centre of the storm. Last week the company reported third-quarter results that beat expectations, but it guided fourth-quarter revenue to between $15 billion and $16 billion, below what analysts had pencilled in. It also pointed to a thinner gross margin and a slowdown in personal computers linked to higher memory prices. The shares plunged almost 29% in a single session on Friday and gave up another 8.8% on Monday. Advanced Micro Devices fell 7.5%, and memory maker Micron lost 5.8%.
Disappointing quarterly reports from Alphabet and Amazon last week added to the unease, because they sharpened questions about whether the huge sums being poured into data centres will earn a satisfying return. One fund manager summed up the mood as a shift from hope to proof: investors, he suggested, now want evidence rather than promises.
Oracle and Marvell add to the strain
Two corporate announcements put the spotlight on how the AI build-out is being paid for. Oracle said it would raise $10 billion through bonds and another $10 billion through a share sale to help fund its AI infrastructure spending. Its stock closed down 8.8%. Meta is reportedly preparing a bond offering of at least $20 billion, and Microsoft recently completed a $25 billion debt sale.
Marvell Technology, meanwhile, agreed to acquire optical components maker Lumentum in an all-stock deal valued at about $115 billion including debt, one of the largest technology mergers on record. The market gave it a cool reception on day one. Marvell closed 12.7% lower and Lumentum fell 18.6%. Taken together with Intel’s warning, the reaction suggests that appetite for AI-related risk is thinning, at least for now.
What traders are watching next
Futures were mixed ahead of Tuesday’s open. AMD reports results after the closing bell, and Apple and Palantir shares were softer in premarket trading following their own earnings. In Asia, technology-heavy markets absorbed much of the damage, with Taiwan’s Taiex down 3.8%.
Several events could set the tone for the rest of the week. Investors will study election results and ballot measures touching on pharmaceuticals, housing and AI data centres for clues about future policy. The October US jobs report is due on Friday, with forecasts pointing to a gain of around 55,000 positions and unemployment steady at 4.2%. Nvidia, the bellwether of the AI trade, reports in mid-November.
What a correction does and does not mean
A correction is a label, not a verdict. The Nasdaq 100 is hovering just 0.2% above its 200-day moving average, a widely followed technical gauge, and a decisive break below it could invite more selling from trend-following funds. Yet corrections are a regular feature of long bull markets. The S&P 500 remains roughly 4% below its October record and about 11% higher than a year ago.
For ordinary savers, the lesson is concentration. A small number of chip and software companies carry heavy weight in major indices, so even a broad fund can feel the swings of the AI trade. Financial advisers typically caution against making portfolio decisions on the strength of a few trading sessions. This report is for information only and is not investment advice.
