Nasdaq has its worst day since June as chip stocks plunge 6.7%

U.S. stocks fell on Thursday, Oct. 22, and the Nasdaq Composite had its steepest one-day drop since early June as a run of AI-related earnings reports revived worries about the cost of the AI buildout, Reuters reported.

Chipmakers led the selloff.

The Philadelphia SE Semiconductor Index plunged 6.7%, its biggest daily drop since June 23, and is now more than 26% below its June 22 record close, according to Reuters. Intel, AMD, Sandisk and Marvell each fell more than 8%. Lam Research lost 11.75% and Nvidia fell 4.4%, Investing.com data showed.

Meta dropped about 7% after its results showed its first cash outflow in more than a decade because of AI spending, and Tesla fell 3.1% despite reporting positive free cash flow, Reuters reported.

How the major indexes closed

The Nasdaq lost 694.00 points, or 2.60%, to 26,008.86. The S&P 500 fell 93.74 points, or 1.21%, to 7,663.43, its worst session since July, per CNBC. The Dow Jones Industrial Average rose 11.89 points, or 0.02%, to 52,867.98, helped by gains in Procter & Gamble, Home Depot and Johnson & Johnson.

Bonds rallied and oil climbed

Investors moved into Treasurys. The 10-year yield fell 18.5 basis points to about 4.96%, dropping below 5% for the first time in nearly a month, CNBC and The Wall Street Journal reported. Brent crude rose 4% to settle at $113.17 a barrel, its highest settle since May, after a report that the U.S. and Israel were drawing up plans for renewed strikes on Iran, according to CNBC.

What Nvidia's CEO said

Nvidia CEO Jensen Huang told CNBC that capital for the AI buildout is becoming scarce. "The demand [for] the capital is much greater than the availability of the capital," he said when asked about neocloud providers.