Stock Rotation Hits AI Winners on Spending Worries: Markets Wrap
(Bloomberg) — A selloff in several tech companies spurred a rotation into a broader category of stocks while fueling a push toward the safety of bonds.
The record plunge in Alphabet Inc. shares on disappointing sales revived doubts over the artificial-intelligence trade. The Nasdaq 100 lost 1.4%. Microsoft Corp. drew blowout demand for its $25 billion debt offering. In late hours, Amazon.com Inc. slumped as its spending soared on efforts to meet demand for AI services. Intel Corp.’s revenue forecast missed estimates.
Not every tech firm fell, but a basket of AI winners sank 2.7%. In a sign of rotation, over 400 shares in the S&P 500 rose.
Thursday’s price action was a “microcosm” of what the stock market has experienced for much of October: Concerns about the AI trade weighing on technology and communication services, but leaving other areas relatively unscathed, said Chris Larkin at E*Trade from Morgan Stanley.
Tech losses revived the haven appeal of Treasuries, with short-dated notes outperforming. Oil wavered as traders parsed conflicting signals on the direction of US military strategy in Iran.
Just a day after the Federal Reserve left rates steady, data showed the US economy expanded in the third quarter at the fastest pace in a year. Meanwhile, the personal consumption expenditures price index — the Fed’s preferred inflation measure — rose 0.5% in September, the most in six months.
“It was another strong round of economic data that shows ongoing inflationary pressures and growth split between the AI buildout and consumption,” said Ian Lyngen at BMO Capital Markets.
AI is still the major theme for activity, but economic resilience is still a broad-based story, according to Eli Nir and Oscar Munoz at TD Securities.
“Couple that with the AI-led inflationary pressures, and it’s clear why the Fed both upgraded its growth assessment and remained acutely focused on their inflation mandate,” they added.
White House National Economic Council Director Kevin Hassett hinted that he expected the Fed would raise rates if inflation figures for this month are elevated.
“If October comes out really high, then I think the Fed would probably appropriately act,” he told Bloomberg Television.
Elsewhere, European Central Bank President Christine Lagarde played down the danger that inflation will spread beyond energy after news that she’ll step down early overshadowed a decision to leave rates untouched.
Corporate Highlights:
Anthropic PBC is SpaceX’s largest single customer, a person familiar with the matter said, accounting for more than a third of the revenue for Elon Musk’s AI, satellite and rocket venture during the third quarter of this year. Starbucks Corp.’s US sales rose faster than expected in the latest quarter, helped by spruced-up stores and a strong performance for the coffee chain’s autumn menu items. Coinbase Global Inc. returned to profitability for the first time in a year while posting a quarterly decline in revenue, showing how closely the largest US digital-asset platform’s fortunes remain wedded to crypto markets. Reddit Inc. said it plans to limit access to its online user forums to users with accounts to try to deepen engagement and improve the advertising business that continues to drive its solid earnings results. Roblox Corp. reported third-quarter users that missed analysts’ expectations amid questions about whether a new hit game could reverse a recent slowdown in user engagement triggered by more robust child-safety measures. Some of the main moves in markets:
Stocks
The S&P 500 fell 0.3% as of 4 p.m. New York time The Nasdaq 100 fell 1.4% The Dow Jones Industrial Average fell 0.3% The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.2% to $1.1172 The British pound rose 0.4% to $1.3376 The Japanese yen was little changed at 157.73 per dollar Cryptocurrencies
Bitcoin fell 1.3% to $80,227.45 Ether fell 2.1% to $2,309.16 Bonds
The yield on 10-year Treasuries declined eight basis points to 4.94% Germany’s 10-year yield declined two basis points to 3.36% Britain’s 10-year yield declined three basis points to 5.29% Commodities
West Texas Intermediate crude rose 0.1% to $102.90 a barrel Spot gold fell 0.9% to $4,029.47 an ounce –With assistance from Robert Brand.
©2026 Bloomberg L.P.
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