Wall Street Slips on AI Worries as Nasdaq-100 Enters Another Correction

US stocks closed lower as AI and big-tech concerns deepened, with the Nasdaq-100 in its third correction this year. Apple and Palantir results, US strikes on Iran's Qeshm Island and a fifth RBA hike shaped the global backdrop.

Maz Vantage ·

Wall Street: tech and AI worries weigh

US stocks gave up early gains on Monday and closed lower as pessimism about big tech and the artificial-intelligence trade grew, according to RTTNews via Nasdaq. MarketWatch reports that the Nasdaq-100 has slid into its third correction of the year as the October "tech wreck" continues, raising the question of whether a bear market is next (MarketWatch). The same outlet notes that traders who rushed into a leveraged Nasdaq-100 ETF last month to buy the dip were hurt by the move (MarketWatch). Another piece points to an unusual pattern: the market's least-favoured stocks have fared better than its AI favourites in recent months (MarketWatch).

Big-company earnings: Apple and Palantir

Apple reported stronger-than-expected revenue in its first results under new CEO John Ternus, who took over in September. The Guardian says the result bucked a weaker trend among tech giants this quarter, with Alphabet, Amazon and Intel reporting disappointing results, and an analyst cited there pointed to record iPhone revenue and strong growth in China (The Guardian). MarketWatch adds that the shares were nonetheless under pressure, because a worsening memory crunch and slowing services business offset strong iPhone demand (MarketWatch).

Palantir beat on earnings, but its stock fell as slower growth in US commercial contracts gave some analysts pause (MarketWatch). Nasdaq content cites third-quarter revenue of $2.3 billion, up 96% year over year (Nasdaq). In deal news, shares of both Marvell and Lumentum fell Monday after Marvell announced an all-stock agreement to buy Lumentum, and shareholders criticised the terms (MarketWatch).

Valuation context

MarketWatch observes that the US stock market has gone nowhere for about five months, leaving the S&P 500's forward price-to-earnings ratio below its five-year and 10-year averages (MarketWatch).

Geopolitics and oil

The US reportedly carried out limited strikes on Iran's Qeshm Island, in the Strait of Hormuz, late Monday, described as "defensive" and not thought to signal a return to full hostilities. They came hours after Vice-President JD Vance voiced optimism about diplomacy, and on the eve of US midterm elections (The Guardian). Saudi Aramco reported significantly higher third-quarter profit, helped by higher prices for crude and refined and chemical products despite weak volumes (Nasdaq). Investing.com's technical commentary describes Brent breaking below its Ichimoku cloud and gold, silver and copper trading in downtrends (Brent, Gold).

Central banks

The ECB kept its three key interest rates unchanged on 29 October, saying that rising energy prices pose upside risks to inflation and downside risks to growth, and that it is not pre-committing to a rate path (ECB). The ECB also announced that President Christine Lagarde will step down on 7 February 2027 (ECB). In Australia, the Reserve Bank raised its cash rate to 4.85%, the highest since 2008 and its fifth increase of 2026. Governor Michele Bullock said "some pain now will prevent even worse pain down the track", and the bank's signals suggest it may now wait to gauge the effects before acting again (The Guardian).

What to watch

European shares were expected to open lower on Tuesday following Wall Street's slide (Nasdaq). Investors will be watching the US midterm elections, the Iran situation and whether the AI-related sell-off extends.

Sources