The Nasdaq Composite sank 694 points on Thursday as Meta and Tesla tumbled after earnings, dragging the broader tech sector down amid fresh worries about AI spending.
Stock market decline (Image via Kiplinger. Credits: Kiplinger)
Nasdaq Drops 694 Points as Meta Slumps 7% on Earnings
Stocks closed mostly lower Thursday as poorly received Magnificent 7 earnings and concerns about AI investment triggered a sell-off across tech. At the close, the tech-heavy Nasdaq Composite was down 2.6% at 26,008 and the broader S&P 500 was 1.2% lower at 7,663, while the blue-chip Dow Jones Industrial Average ticked up 0.02% to 52,867.
Meta Platforms (META) was one of the biggest drags on the Nasdaq, sliding 7% after earnings — its worst day since July. The Facebook parent reported third-quarter revenue of $64.6 billion, beating Wall Street’s estimate, but earnings of $3.83 per share fell short and free cash flow turned negative as spending on its AI initiatives ramped up.
Meta’s AI Spending, Class C Shares and a California Tax Fight
Meta raised the low end of its full-year capital spending forecast, now expecting to spend between $135 billion and $145 billion in 2026, up from a previous outlook of $130 billion to $145 billion. UBS Global Research analyst Stephen Ju struck a positive note, arguing Meta is “entering a capex harvest cycle, with three years of investment in frontier AI models beginning to translate into both stronger near-term advertising performance and accelerating adoption of AI products.”
Meta also announced its board approved non-voting Class C shares that will begin trading in January 2027. The move effectively creates a two-for-one stock split for existing shareholders, and Meta says it will help preserve CEO Mark Zuckerberg’s voting control — which was at risk pending passage of California’s proposed wealth tax — while also funding its AI expansion plans.
Oil Jumps, Fed Meeting Looms
Beyond earnings, oil prices climbed after President Donald Trump said late Wednesday that the U.S. is not currently negotiating with Iran to end the war in the Middle East. WTI crude rose 3% to $100.06 per barrel, now up nearly 11% month to date. Ahead of next week’s Federal Reserve meeting, investors are weighing how rising oil prices could impact inflation and interest rates.
Procter & Gamble offered a brighter spot: its results signaled a resilient consumer, a small counterweight to the tech rout.
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Source: Kiplinger — read the full story there.
