S&P 500 Slips 0.56% on the Week as AI Spending Costs Hit Tech
A 1.8% Friday drop erased early gains as Intel collapsed and software absorbed a brutal two-day selloff
Photo by Igor Omilaev on Unsplash
The S&P 500 slipped 0.56% to 7,580.07 for the week as a 1.8% Friday rout over AI spending costs hit Intel, software and chip names.
A flat week hid a violent Friday
The S&P 500 closed the week ending October 30 at 7,580.07, down 0.56% from the prior Friday. The Nasdaq 100 fell 1.97%. The index now sits roughly 3% below the record high it set earlier this month.
The weekly number understates the damage. Friday alone took 1.8% off the S&P 500 and 2.9% off the Nasdaq Composite, each the worst session since June. The Dow lost about 1.1%, or 572 points.
The trigger was the same one running through October. Investors want proof that hundreds of billions in AI capital spending will earn a return, and this week's earnings gave them little of it.
Intel posts its worst day since 1974
Intel (INTC) shares dropped 28.58% on Friday after the company guided fourth quarter results below expectations. Management pointed to weak PC demand, with higher memory chip costs hurting consumers. The move was the worst single day for the company since 1974 and the second worst on record.
The damage spread down the chip chain. AMD fell 10.88%, Dell 10.77%, CoreWeave 9.66% and Nebius 10.38%. The semiconductor ETF SMH lost 6.98% on the session.
Nvidia fell 4.2%. When the largest AI supplier trades down in sympathy with a PC chipmaker, the market is repricing the whole complex, not one name.
Alphabet and Amazon put the spending bill on the table
Alphabet shares fell about 12% after earnings paired heavy infrastructure spending with weak search revenue. Investors focused on a slowdown in the advertising business and a ramp in AI outlays at the same time. Amazon dropped 1.4% on Friday after its report showed higher AI spending alongside sales and profit misses.
J.P. Morgan analysts estimate this year's AI capex from Amazon, Alphabet, Meta, Oracle and Microsoft will roughly equal their combined spending since ChatGPT launched in November 2022. Free cash flow is not keeping pace with that outlay. Debt is filling the gap, which is why the concern has reached credit markets.
Software took the sharpest hit
The software ETF IGV lost 5.7% on the week. It fell 3.52% Thursday and another 3.41% Friday, reversing the leadership it held a week earlier. ServiceNow dropped 26.95% on Thursday alone and finished the week down 33.87%. Fortinet fell 20.09% the same day.
Under the surface, the market held up better than the headline index. The equal-weight S&P 500 rose 0.82% for the week. About 61.6% of S&P 500 members still trade above their 50-day moving average, even after Friday removed 4.4 points from that reading.
The [Market Breadth dashboard](/breadth) and the [Sector Rotation view](/sector) are the places to confirm whether money is leaving tech or leaving the market.
Rates and volatility frame the next move
The 10-year Treasury yield ended the week near 4.98%, down 2 basis points. High-yield spreads tightened 12 basis points to 3.26%, so credit has not broken. The VIX settled at 19.42.
That combination says stress is concentrated, not systemic. A move higher in yields would change the math for AI borrowers quickly, since financing costs sit at the center of the spending debate.
Okta joins the S&P 500 next week in place of Kenvue. The next test is whether the early November sessions bring a bounce in software and chips or extend Friday's selling. Watch the Monday open for the first read.