Markets
Chipmakers Dragged the Nasdaq to Its Worst Day Since August as Doubts About AI Spending Returned
The Nasdaq Composite fell 1.25% on October 8 and the semiconductor ETF lost 2.84%, with Arm, Oracle and Intel down more than 5%. The Dow rose, and consumer staples had their best day since July.
Two days after closing at a record, the Nasdaq Composite had its worst session in seven weeks. It fell 1.25% on Thursday, October 8, to 27,193.34, its biggest one-day drop since August 18. The S&P 500 lost 0.47% to 7,765.36. The Dow Jones Industrial Average, which has far less technology exposure, actually rose 0.10% to 51,231.64.
Semiconductors led the decline. The VanEck Semiconductor ETF (SMH) fell 2.84% to $607.27, its worst day since September 14. Arm Holdings lost 6.48%, Intel 5.34%, Micron 4.79% and Broadcom 4.35%; AMD fell 3.90%, TSMC 3.01% and Nvidia 2.94%. Outside chips, Oracle — whose data-centre build-out depends heavily on AI demand — dropped 5.48% to $135.69. Coverage of the session tied the selling to a Financial Times report suggesting that OpenAI's revenue is running well below earlier estimates, which revived a question the market keeps returning to: whether the hundreds of billions being spent on AI infrastructure will earn an adequate return.
The money didn't leave the market so much as move within it. Consumer staples (XLP) rose 2.11%, their best day since July 16, led by Philip Morris (+4.05%), PepsiCo (+3.73%), Altria (+2.94%), Coca-Cola (+2.27%) and Walmart (+2.22%). PepsiCo rose even though it trimmed its earnings growth forecast alongside third-quarter results that beat expectations. Energy (XLE) gained 2.97% as oil jumped. Apple, with its large consumer business, rose 1.11%, and Palantir gained 2.40%.
A one-day reversal after a record isn't unusual, and the Nasdaq is still less than 1.5% below its October 6 peak. What makes Thursday worth noting is the pattern: on a day when the AI story was questioned, investors bought companies that sell cigarettes, soda and groceries. That kind of rotation shows how much of the market's recent strength rests on one theme. Our new guide explains why semiconductor stocks tend to move so much more than the market.