Market Recap - Thursday, October 30, 2025
Stocks Slip as Big Tech Wobbles, Market Eyes AI Spending and Trade Truce
Markets pulled back today, with the S&P 500 falling 0.99%, the Nasdaq sliding 1.57%, and the Dow down 0.23%, as investors reacted to mixed tech earnings, growing concerns about soaring AI-related spending, and lingering questions around the Fed’s rate path. The Russell 2000, which tracks smaller companies, also slipped 0.76%. While Google’s strong results offered some relief, Meta’s disappointing outlook and broader tech weakness dragged the indexes lower into the close.
Beneath the surface, it was a mixed bag. Pharma stocks (led by Eli Lilly), banks, credit card companies, and cruise lines stood out with gains, while airlines, steelmakers, telecom, and apparel names sold off. Nvidia and Microsoft dipped despite solid earnings, as investor focus shifted to the mounting costs of AI infrastructure. Meta was the day’s big laggard after warning about rising expenses next year. Meanwhile, retail investor favorites and highly shorted names underperformed, pointing to a more cautious tone.
The bond market added more pressure, with Treasury yields rising again following Wednesday’s hawkish Fed rate cut. The dollar gained for a second day, and gold edged higher, while Bitcoin dropped over 3%, retreating to around $107K. Oil prices were roughly flat.
The first wave of Big Tech (Mag 7) earnings sent mixed signals: Alphabet impressed with strong cloud growth and monetization of AI products reaching over 2 billion users. Microsoft beat expectations but issued guidance that fell just short of the buyside’s high hopes. Meta, however, spooked markets by flagging that 2026 expenses will grow much faster than in 2025, alongside a jump in AI capex. Combined, the trio reported nearly $80B in capital spending last quarter, a near 90% jump from last year — highlighting both the promise and risk of the AI boom.
Elsewhere, earnings reports from Eli Lilly, ServiceNow, Mastercard, and Cardinal Health helped support select sectors, but disappointments from Chipotle, Cigna, eBay, Sprouts, Roblox, and others weighed heavily. A surprise trade truce between Trump and Xi removed some uncertainty around tariffs, but the deal was seen as more symbolic than game-changing, and skepticism remains around long-term stability.
Here’s Our Take:
Markets are clearly entering a more selective phase, where good earnings aren’t always good enough, and investors are demanding more than just growth — they want efficient, profitable growth, especially in AI. The sharp divergence in big tech reactions shows the bar is sky-high. Meta’s spending plans unnerved markets already sensitive to inflation and higher-for-longer interest rates. That said, Google and Microsoft’s momentum in AI and cloud still validate the broader theme.
The Fed’s recent hawkish tone, combined with rising Treasury yields and still-elevated inflation signals, means that pressure on valuations — especially in long-duration growth stocks — may persist. Meanwhile, the Trump-Xi trade truce is a near-term positive, but it doesn’t erase the deeper rift between the US and China. Investors should brace for ongoing volatility, keep an eye on quality earnings, and stay diversified. While AI remains a secular driver, not all AI stories will be rewarded equally — especially in an environment where every dollar of capex is under scrutiny.
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