S&P 500 7,757, Nasdaq 26,703, Dow 52,856 Face AI Selloff as META, TSLA, LRCX Slide

Thursday’s premarket tape is undoing Wednesday’s work in one overnight session. By 7:16 a.m. ET, S&P 500 futures were down 1.1%, Nasdaq 100 futures had dropped 1.7%, and Dow futures were off 0.7%. On the contract screens, S&P futures sat at 7,724.75, down 75.50 points. Nasdaq 100 futures traded at 29,506.75 after shedding 500.25 points. Dow futures printed 52,778, a 281-point decline, and Russell 2000 futures slipped 16.50 points to 2,777.70. The CBOE Volatility Index jumped 1.47 points to 18.15, an 8.8% pop that shows hedging demand is back before the opening bell.

One idea runs through every ticker that matters this morning: the market has stopped paying for AI revenue and started charging for AI spending. Meta beat on revenue and earnings, then lifted its capex floor. Tesla beat on earnings and cut its capex. Lam Research printed a record quarter. IBM topped estimates on both lines. All four are lower before the bell. What they share is the capital bill attached to the AI buildout and the open question of when it pays back.

Tech is leading the decline. Semiconductors reversed the gains they posted Wednesday, and the selling started in Asia, where Korea’s chip complex got smoked overnight. Oil added a second source of pressure. Brent crude climbed $3.08, or 2.83%, to $111.90 a barrel after a drone strike near Saudi Aramco’s Shaybah field. West Texas Intermediate gained $2.18 to $99.33. Crowded AI positioning unwinding at the same time crude runs toward a five-month high is the setup into the 9:30 a.m. open.

The damage is lopsided. Nasdaq 100 futures are falling at more than twice the pace of Dow futures, which looks like a rotation out of growth rather than a broad liquidation. Small caps are holding up better than megacap tech: Russell 2000 futures are down 0.59%, against 1.67% for the Nasdaq 100 contract. Several old-economy names with fresh earnings beats, including Lockheed Martin, CSX and Dow Inc., are green in premarket. That split will shape the first hour.

Weekly jobless claims from the Labor Department land at 8:30 a.m. ET. Honeywell and Blackstone are still on deck, and American Airlines already reported before the bell. None of that changes what futures are pricing. Wednesday’s AI optimism rested on one blowout print, and Thursday’s reports reopened the cost debate across the whole complex. The opening auction will show whether dip buyers want to defend 7,700 on the S&P 500 or step aside until the selling in chips burns out.

Wednesday’s Close: S&P 500 7,757.17, Nasdaq Composite 26,702.86, Dow 52,856.09

Wednesday was the session bulls wanted. The S&P 500 rose 44.60 points, or 0.58%, to 7,757.17, its third straight gain. The Nasdaq Composite added 278.04 points, or 1.05%, to 26,702.86. The Dow Jones Industrial Average climbed 360.21 points, or 0.69%, to 52,856.09. The Russell 2000 gained 7.61 points to 2,781, a 0.27% move that had small caps following the rally rather than leading it.

The day built from the overnight session. Futures firmed Tuesday night as traders digested SpaceX’s report, with Nasdaq 100 contracts up 1% and S&P 500 futures up 0.47%. The S&P 500 opened at 7,736.43 against a prior close of 7,712.57 and was up 0.3% shortly after 9:30 a.m., with the Nasdaq Composite up 0.7% and the Dow ahead 90 points. The index traded between 7,709.34 and 7,770.40. The bid faded in the final hour as energy stocks jumped and yields edged higher, and the S&P 500 closed 13 points below its high. S&P 500 volume came in at 2.89 billion shares.

The broader picture is less settled. The S&P 500 ended 1.1% below its 52-week high of 7,844.52, set earlier this month, and 23% above its 52-week low of 6,316.91. The Nasdaq Composite is 3.3% below its record close of 27,599.89 from October 6. On October 16 the Composite fell 2.1% to 26,140, capping its worst week since June as traders questioned the debt being raised to fund AI infrastructure. Wednesday’s close put the index 2.2% above that low, a recovery that leaned almost entirely on AI-linked names.

Leadership was concentrated. Nvidia rose 2.54% to $221.97 on 87.09 million shares. AMD gained 3.36% to $552.72. Micron added 1.96% to $913.67, and Apple rose 1.32% to $343.99. Tesla ripped 3.41% to $386.47 ahead of its report as merger chatter with SpaceX lifted both names. Not every megacap joined in. Alphabet fell 1.62% to $334.76, and Amazon slipped 0.10% to $262.37 a week ahead of its own report.

The Nasdaq Composite’s 1.05% gain was 1.8 times the S&P 500’s advance, and the Dow’s 360 points came from a mix of tech and industrials. The Fed is in its blackout period ahead of next week’s decision, and the economic calendar has been quiet since last week’s hotter inflation data, which left earnings in full control of the tape. That control is now running the other way. Every dollar of Wednesday’s Nasdaq gain is at risk if the futures losses carry into the cash session.

SpaceX’s $14.58 Billion Quarter Lit the Fuse Before the Capex Bill Arrived

Wednesday’s rally started with SpaceX. The stock jumped $11.52, or 7.79%, to close at $159.31 on 220.79 million shares, the heaviest volume on the board. It had been up 10% in morning trade before giving some back. The report it was trading on was the strongest data point of the AI earnings season so far.

Third-quarter revenue reached $14.58 billion, up 161% year over year and well above the $12.72 billion consensus. The AI division, renamed Super Intelligence, brought in $7.56 billion, up 830%, and posted a $431 million operating profit. That segment alone generated more revenue than Starlink and the launch business combined. Connectivity revenue rose 69% to $5.25 billion, with Starlink subscribers climbing to 13.6 million from 12 million in the prior quarter and average revenue per user rising to $69 from $66. Launch revenue grew to $1.77 billion from $1.67 billion. Operating income came in at $2.8 billion, and net income reached $4.4 billion, or $0.35 a share, against a $1.05 billion loss a year earlier. Adjusted EBITDA printed $8.8 billion.

Guidance was the knockout punch. SpaceX projected first-quarter 2027 revenue of $33 billion to $37 billion, against an average estimate of $22.2 billion. The $35 billion midpoint is 2.4 times the quarter just reported. Elon Musk added fuel on the call by confirming that Tesla and SpaceX have each formed special committees to study a merger, while cautioning that a deal is not guaranteed.

The same report contained the problem that is driving Thursday’s selloff. Capital expenditures totaled $19.59 billion in the quarter, more than the company’s revenue, and $16.44 billion of that, or 84%, went to AI. Investors bought the growth on Wednesday. On Thursday they are focused on what the growth costs. SpaceX fell 2.3% in premarket trading.

Super Micro Computer followed the same path. On Wednesday it jumped 12.7% in premarket trading to $36.69 after forecasting revenue and margins above estimates, then closed up 9.55% at $35.57 on 82.42 million shares. On Thursday it is down 4.7% before the bell. Space names ran with SpaceX: Rocket Lab rose 5.44% to $53.67. Strategy, the bitcoin-treasury company, gained 7.54% to $153.48.

The SpaceX quarter also produced a loser. AT&T fell 6.45% to $21.91 on 84.53 million shares as traders weighed its earnings against the competitive threat from SpaceX’s Starlink Mobile plans. The carrier’s chief executive played down the risk, but the stock had its worst session in the S&P 500’s large-cap telecom group. Wednesday showed how far AI disruption now reaches: one rocket company’s earnings repriced a wireless carrier, a server maker, a chip complex and a car company in the same session.

Meta’s $64.60 Billion Revenue Beat Collides With a Higher $135 Billion Capex Floor

Meta Platforms delivered the cleanest beat of the night and still could not hold a bid. Third-quarter revenue reached $64.60 billion, up 26% from a year earlier and above the $63.33 billion consensus. Earnings per share came in at $3.83, against $3.57 expected and $1.05 a year ago. Advertising revenue rose 26% to $63.06 billion, and management said engagement on Facebook and Instagram hit record levels. The numbers are posted in Meta’s investor relations filings.

Guidance was strong too. Meta projected fourth-quarter revenue of $73 billion to $76 billion, above expectations at the midpoint. The $74.5 billion midpoint implies 15% sequential growth from the quarter just reported, an acceleration few companies of this size can deliver.

The friction is on the spending line. Meta raised the low end of its 2026 capital expenditure range to $135 billion from $130 billion and kept the top at $145 billion. A $5 billion lift to the floor is small next to the revenue beat, but the market is paying attention to direction. Every hyperscaler that tightens its range upward adds to the cumulative AI capex number that has been weighing on the Nasdaq since mid-October.

The quarter also absorbed a $9.89 billion legal charge tied to a settlement with 52 state attorneys general over teen mental-health litigation. That charge equals 15% of the quarter’s revenue, and it is why operating income missed expectations even as revenue and EPS beat. Meta said full-year operating income should exceed 2025 levels excluding the charge. Reality Labs posted a narrower operating loss than expected.

The capital-structure news may matter more over the long run. The board approved a new, publicly listed, non-voting Class C common stock, effective January 19. Meta will distribute one Class C share for each outstanding Class A and Class B share as a one-time stock dividend, which works like a 2-for-1 split on the Class A price without changing anyone’s voting power. Management said the new shares give it flexibility for capital raising, employee compensation and acquisitions. In other words, Meta has built itself a currency to help fund the AI buildout without diluting control.

On the call, Mark Zuckerberg said 25% of people who downloaded the Muse AI assistant use it daily, and admitted Muse is compute-intensive to run in the near term. Meta closed Wednesday at $697.52, up 0.47%, and is trading more than 1% lower before the bell. Taken together, the report was strong, the guide was strong, and capex went up, so the stock goes down. That pattern is setting the price across AI this morning.

Tesla Slides 5% to $367.20 After Cutting Capex to $20 Billion and Its Vehicle Target to 5 Million

Tesla gave the market the opposite capex story and still got hit. Shares fell 5.0% in premarket trading to $367.20. That wipes out Wednesday’s $12.76 run-up and $6.51 more from the $373.71 level where the stock started Wednesday. The decline is a $19.27 swing from Wednesday’s close of $386.47.

The quarter itself was better than feared. Adjusted earnings per share came in at $0.48 against a $0.45 consensus. Revenue was flat at $28.05 billion, slightly ahead of the $27.92 billion estimate. Automotive gross margin excluding regulatory credits improved to 18.1% from 15.4% a year ago and 16.3% in the second quarter. Free cash flow swung back to a positive $1.53 billion after Tesla’s first negative free-cash-flow quarter in two years. Net profit fell 4% to $1.7 billion, including a $142 million mark-to-market loss on the company’s SpaceX holdings. Automotive revenue dropped 3% on lower average selling prices and battery supply constraints. The full figures are in Tesla’s investor relations release.

The problem is in the forward picture. Tesla cut its 2026 capital expenditure forecast to $20 billion from more than $25 billion, which pushes the heavier spending on Optimus, Cybercab and the Terafab chip project into 2027 and 2028. Musk said the Terafab venture with SpaceX would likely cost north of $100 billion over time. The lower near-term capex reads as a slower ramp, not cost discipline, and the market treats a slower ramp at Tesla as a growth problem.

The volume target took the biggest hit. Musk now aims for 5 million vehicle sales by the end of the decade, against his earlier projection of 20 million, a 75% cut to the ambition behind the valuation. He also asked investors to temper expectations for Optimus, saying the robot still needs significant AI work before it can handle open-ended tasks. Tesla plans to begin shipping Optimus to corporate customers by the end of 2027. Musk said Robotaxi will not move earnings this quarter and could become a visible revenue driver in the second quarter of 2027.

On the SpaceX merger, Musk declined to elaborate on the call, describing the topic as a minefield. Tesla is the only Magnificent Seven member down in 2026, off 14.1% year to date, while the other six are up as much as 26.6% and the S&P 500 has gained more than 13%. Thursday’s premarket drop widens that gap. Below $370, Wednesday’s merger-hype gap is fully closed and the chart heads back toward its pre-earnings range.

Lam Research Drops 8.4% on a Record $8.22 Billion Quarter as the Chip-Equipment Trade Cracks

Lam Research is the clearest example of the AI-hardware reset. The chip-equipment maker reported record fiscal first-quarter revenue of $8.22 billion for the period ended September 27, up 54% from a year earlier. Adjusted earnings per share came in at $2.20, two cents above the $2.18 consensus. Operating margin topped 40% for the first time in company history. The stock fell 8.4% in premarket trading anyway.

The guidance explains the selling. Lam projected second-quarter adjusted earnings of $2.33 a share, plus or minus 15 cents, on revenue of $8.60 billion, plus or minus $400 million. The midpoint implies 4.6% sequential revenue growth and 6% EPS growth. But the bottom of the revenue range, $8.20 billion, is below the $8.22 billion just reported. The low end of EPS guidance, $2.18, is below the $2.20 just earned. For a stock priced on an accelerating AI capex cycle, a guide that allows for a flat or down quarter takes away the acceleration story.

The two-cent EPS beat also mattered. Lam’s last two reports cleared estimates by wider margins. Last quarter, revenue of $6.72 billion grew 30% and adjusted EPS of $1.82 beat a $1.69 estimate, and guidance came in well above consensus. Going from double-digit-percentage beats to a two-cent beat is a deceleration, even if the absolute numbers are records.

Lam is also the most direct U.S. read-through to the Asian chip selloff. Memory makers are a core customer base for the company, and when SK Hynix and Samsung drop between 7% and 10% in one session, wafer-fabrication equipment demand gets marked down in sympathy. Chip-equipment stocks are long-duration bets on fab construction. When the market starts questioning how much of the AI capex wave is already in the price, equipment names fall first and hardest.

Wednesday’s semiconductor gains came alongside Nvidia, AMD and Micron rallying, and those gains are now set to reverse. Nasdaq 100 futures are down 1.7%, and the chip-heavy contracts are leading. With Lam down 8.4% before the open and the overnight Asian session already priced in, the first hour will show whether chip buyers defend Wednesday’s breakout or let the whole group roll over to its mid-October lows. The equipment group’s reaction to a record quarter says the bar now sits above records.

IBM Falls 5.7% Despite Beating at $2.95 a Share as AI Return-on-Investment Doubts Spread

IBM adds the enterprise customer’s view to the AI spending debate, and the stock is paying for it. Shares slid 5.7% before the open despite a quarter that beat on both lines. Adjusted earnings per share came in at $2.95 against a $2.86 consensus, and revenue of $17.1 billion topped the $16.82 billion forecast.

The cracks were in margin and guidance. IBM’s adjusted gross margin of 58.5% missed the 59.1% estimate by 60 basis points, a meaningful shortfall for a company whose investment case depends on mix shifting toward higher-margin software. The company left its full-year constant-currency revenue growth forecast unchanged at 4% to 5%. A beat-and-hold in a tape that wanted a raise reads as a soft outlook.

What turned the reaction from mild to sharp was management’s commentary. Chief executive Arvind Krishna said corporate customers are questioning whether their AI investments are producing measurable returns. That comment matters well beyond IBM. Hyperscalers like Meta and SpaceX are spending tens of billions on AI on the assumption that enterprises will pay for AI services at scale. When one of the largest enterprise technology vendors says those customers want proof of return before spending more, it challenges the demand side of the whole AI buildout.

IBM’s summer was already rough. Its preliminary July report was poorly received, and the stock has spent recent months under pressure. Thursday’s move extends that weakness. It also links IBM to Lam and Meta: on the supply side, equipment makers need hyperscaler capex to keep climbing, and on the demand side, hyperscalers need enterprises like IBM’s clients to keep buying. IBM’s warning puts pressure on the second link in that chain.

The software margin miss sharpens the point. Software has carried the highest gross margins in IBM’s business. A gross-margin shortfall alongside a flat revenue guide suggests the mix shift toward AI and hybrid cloud is not yet adding enough margin to offset softer areas. For investors weighing whether AI is lifting enterprise IT budgets or just reshuffling them, IBM’s numbers point toward reshuffling. That is why a stock that beat on revenue and earnings is trading 5.7% lower this morning.

Asia’s Chip Rout: KOSPI Falls 5%, SK Hynix Drops 9.2% and Tokyo Electron Loses 6%

The overnight session set the tone before New York had a chance to react to its own earnings. South Korea’s KOSPI fell 5% as the AI selloff hit the country’s chip giants. SK Hynix dropped 9.2% to its lowest level since June 17. Samsung Electronics fell 7.5% to its weakest level since June 8. When the two names that dominate Korea’s index weighting fall by that much at once, the benchmark can’t hold up.

Japan showed how concentrated the selling was. The Nikkei 225 fell 1.6%, while the broader TOPIX rose 0.5%. AI-exposed heavyweights did the damage: SoftBank Group fell 6.5%, Tokyo Electron lost 6%, Advantest dropped 4%, and memory maker Kioxia shed 9%. A Nikkei loss alongside a TOPIX gain means most Japanese stocks rose overnight while the chip names dragged the price-weighted benchmark lower. That pattern is repeating in U.S. futures, where Nasdaq 100 contracts are down 1.7% and Dow contracts are down 0.7%.

The selling followed weakness in U.S.-listed chipmakers in extended trading after the Lam Research report, then fed back into U.S. futures. SK Hynix’s losses came as investors questioned how quickly hyperscale AI projects can turn profitable after the companies committed huge sums to data centers. Demand for high-bandwidth memory depends directly on hyperscaler capex, so any hint that capex is peaking or being questioned hits the memory names first.

India’s market sold off as well, driven by oil rather than chips. The BSE Sensex fell 678.90 points, or 0.92%, to 73,030.79 in morning trade. The NSE Nifty dropped 250.90 points, or 1.10%, to 22,568.10, a second straight day of losses, with crude above $110 and U.S.-Iran tensions weighing on an importer-heavy market. European equities opened lower, with London’s FTSE 100 sliding as the Saudi drone strike pushed crude higher.

This overnight action is the second wave of the AI-chip unwind that has been running since summer. Korea’s market has been the most leveraged expression of the memory trade all year, and SK Hynix’s stock had more than tripled before the latest round of selling. The size of Thursday’s moves, 9.2% in Hynix and 6% in Tokyo Electron, signals forced reduction of crowded positions rather than a fundamental downgrade. In a crowded unwind, the selling usually ends when positioning is clean, not when the earnings justify it.

Brent Climbs to $111.90 After the Shaybah Drone Strike as Oil Adds a Second Headwind

The energy market is giving the tape a second problem. Brent crude rose $3.08, or 2.83%, to $111.90 a barrel, near a five-month high, after a Houthi drone attack near Saudi Aramco’s Shaybah oilfield. West Texas Intermediate gained $2.18, or 2.24%, to $99.33 on the December contract. The Brent-WTI spread now stands at $12.57.

The attack killed two people and injured two others. The Saudi Energy Ministry said the drone targeted the facility, but debris hit a contractor’s vehicle outside and started a fire, and operations were not affected. Shaybah, in the Empty Quarter near the UAE border, produces 1 million barrels a day. Barrels did not go offline, but the strike adds to a risk premium already priced into a market where Brent has gained 80% this year during nine months of war between the United States and Iran.

The escalation went beyond Saudi Arabia. Washington ordered non-emergency government employees and their families to leave the kingdom, citing Houthi attacks on civilian airports and critical infrastructure, and plans to withdraw family members from other U.S. missions in the region. Iran’s Revolutionary Guard navy said four vessels involved in illegal oil transfers in the northern Persian Gulf were hit and set on fire. Ukrainian drone strikes on Russian oil infrastructure this week added to the supply worries.

The fundamental data gave bulls less support than the headlines. The EIA’s weekly petroleum status report showed distillate stockpiles, which include diesel and heating oil, rising 1.68 million barrels to 104.3 million barrels, against expectations for a 1.16 million-barrel draw. Saudi crude exports rose 7.9% in August to their highest level since March, and Middle East export flows are approaching prewar levels. Russia was expected to deliver its first diesel shipment to the United States on Thursday.

For equities, oil above $110 hits in two places. It lifts input costs for transports and consumer names, which is part of why American Airlines guided to a deeper loss on a fuel spike. It also keeps inflation pressure on the Fed a week before its decision. Energy stocks rallied into Wednesday’s final hour, and that late bid helped pull the S&P 500 13 points off its high. With crude adding 2.8% overnight, energy is the one S&P 500 sector with a clear tailwind at the open. That rotation pulls money out of the same AI names already under pressure.

Treasuries Rally to 5.04% on Safe-Haven Demand as the October 27–28 Fed Meeting Looms

The bond market is doing what equities are not and catching safe-haven flows. The 10-year Treasury yield fell 10.5 basis points to 5.044%, a one-month low. The 30-year yield dropped 7.8 basis points to 5.359%, and the 5-year fell 10.2 basis points to 4.868%. The 10-year has now retreated 30 basis points from its October 1 intraday peak above 5.34%, the highest level since 2002. The 10-year minus 2-year spread widened by 4.15 basis points to 31.32 basis points, a bull steepening that says the market sees growth risk ahead.

Europe is adding to the flows. French government bond yields broke above 5% on Paris budget paralysis and nationwide unrest, pushing investors toward U.S. and German debt. Treasuries, which spent September and early October acting like a risk asset as fiscal worries and Fed hike expectations drove yields to multi-decade highs, are trading like a haven again this week.

The Fed overhang is real. The Federal Reserve raised rates by 25 basis points in September to a 3.75% to 4.00% range, its second shift toward tighter policy under Chair Kevin Warsh, and the committee meets again October 27–28. Last week’s hotter September inflation readings revived hike talk, and the Fed is now in its blackout period, so no official will push back on market pricing before the decision. Oil at $111.90 does not help the doves. A 10-year at 5.04% against a policy rate topping out at 4.00% leaves term premium wide by recent standards.

The dollar is flat. The dollar index sits at 101.648, up 0.04%, near the middle of its recent range after pulling back from 17-month highs at the start of the month. Gold is not getting a safe-haven bid. Futures fell $67, or 1.6%, to $4,083 an ounce. Silver dropped 3.4% to $55.76, and copper lost 2.5% to $6.4175 a pound. Copper’s slide tracks the chip selloff, since AI-data-center construction has been part of the industrial-metals story this year.

Higher yields and oil were the reasons Wednesday’s rally faded in the last hour. Falling yields Thursday are helping rate-sensitive sectors and the equal-weight trade, which is part of why Russell 2000 futures are losing less than half as much as the Nasdaq 100. If the 10-year holds below 5.05% through the open, financials and small caps get a cushion that megacap tech does not.

Defense, Rails and Chemicals Catch the Bid: Lockheed +2.5%, CSX +2.4%, Dow +2.5%, Spotify +3.8%

While AI sells off, the old economy is reporting well. Lockheed Martin gained 2.5% in premarket trading after raising its full-year outlook. The defense contractor now expects 2026 sales of $80 billion to $82 billion, up from $79.75 billion to $81.75 billion, and earnings per share of $30.35 to $30.75, up from $29.95 to $30.65. The $0.25 lift at the EPS midpoint came with a much bigger headline. Lockheed’s backlog jumped 27% sequentially to a record $292 billion, boosted by a $52.5 billion multiyear award for PAC-3 Missile Segment Enhancement interceptors. That backlog covers 3.6 years of revenue at the new guidance midpoint. Lockheed joins RTX and Northrop Grumman in raising its outlook this week, according to Lockheed Martin’s investor relations.

CSX rose 2.4% after the freight railroad’s third-quarter results beat on both lines. Adjusted earnings reached $0.57 a share against a $0.53 estimate, and revenue rose to $4.02 billion from a $3.95 billion forecast. Operating income totaled $1.57 billion, a 39% operating margin, and net earnings reached $1.05 billion. Chief executive Steve Angel credited disciplined execution that moved more freight while holding safety and service standards. Rail volume is a direct read on goods demand in the physical economy, and the CSX print says it is holding up.

Dow Inc. climbed more than 2.5% after the chemicals maker posted third-quarter adjusted profit above estimates. Higher polyethylene prices and cost cuts offset rising raw-material and logistics costs. Revenue in the Packaging and Specialty Plastics segment rose more than 18% to $5.8 billion. Dow is in the middle of a restructuring that includes cutting 13% of its workforce and closing higher-cost assets, and the margin improvement shows the plan is working.

Spotify climbed more than 3.8% in volatile trading after guiding fourth-quarter operating income to €820 million, or $920.53 million, against an €813.4 million consensus. Third-quarter operating income was €672 million, in line, and revenue of €4.97 billion missed the €4.98 billion forecast by €10 million. The fourth-quarter guide implies 22% sequential operating-income growth as the company leans on AI features for holiday user growth.

Other beats on the board: Philip Morris International reported earnings of $2.36 a share on $11.4 billion in revenue, against estimates of $2.31 and $11.35 billion. UniFirst posted $2.61 a share on $645 million in revenue, far above the $2.05 estimate. Defense contractor Aevex jumped more than 11% after disputing a report that the U.S. Navy had stopped buying its GARC boat drone, saying no orders had been halted.

Losers Board: Rollins -7.3%, American Airlines -4%, and Wednesday’s Netflix and AT&T Damage

The losers list goes beyond AI. Rollins, the parent of pest-control company Orkin, dropped 7.3% after a third-quarter miss across the board. Revenue rose 6.2% to $1.09 billion but fell short of the $1.11 billion consensus. Adjusted EBITDA of $257 million missed, operating margin contracted 140 basis points to 20.5%, and adjusted EPS of $0.34 came in a penny below the $0.35 estimate. Chief executive Jerry Gahlhoff said the company was disappointed and is acting to address the problems. Rollins has long been valued as a steady compounder, so a margin contraction gets punished harder than the size of the miss suggests.

American Airlines fell 4% in premarket trading even after record revenue. The carrier posted an adjusted loss of $0.28 a share, better than the $0.35 loss expected, on revenue of $16.34 billion against a $16.22 billion consensus. The net loss widened to $269 million, or $0.41 a share, from $114 million, or $0.17, a year earlier. The full-year guide drove the selling. American now expects an adjusted loss of $1.00 to $1.60 a share for 2026, against a July range of a $0.65 profit to a $0.65 loss. That moves the midpoint from breakeven to a $1.30 loss, and it is a direct result of the fuel spike. For the fourth quarter, the airline forecast an adjusted loss of $0.50 to $1.10 a share, with revenue up as much as 22.5% and capacity up 5.5% to 6.5%. The company also plans to slow growth next year.

Wednesday’s losers carry over into today’s tape. Netflix fell 5.31% to $65.04 on 101.39 million shares, the second-highest volume on the board, extending its slide after Tuesday evening’s results. AT&T dropped 6.45% to $21.91 on the Starlink Mobile threat. Dexcom lost 6.39% to $80.26, Chipotle fell 5.16% to $28.12, Expedia shed 5.03% to $285.64, and CarMax slid 4.33% to $51.49. FMC dropped 5.27% to $5.03.

Wednesday’s gainers outside AI included Charles River Laboratories, up 9.33% to $344.87, Datadog, up 6.50% to $273.09, and Skydance, up 10.85% to $7.87 on 49.56 million shares. Elevance Health rose in early trade after adjusted EPS of $6.99 crushed a $4.70 estimate on $50.4 billion in revenue, and it raised its full-year adjusted EPS floor to $29.00. Intuitive Surgical slid 6% in Wednesday’s premarket after $3 in adjusted EPS on $3.05 billion in revenue failed to impress. Danaher fell 4% before the open on $6.55 billion in revenue, $10 million short of the estimate.

Taken together, the losses spread from AI hardware to consumer discretionary, travel and telecom. Whether the S&P 500 is losing broad support or only working through a tech-led reset will become clearer as these names trade through the cash session.

Key Levels, Breadth and Sentiment: S&P 500 at 7,700, VIX at 18.15, and AAII Bears at 45.8%

The S&P 500’s first test is the 7,700 area. Wednesday’s intraday low was 7,709.34 and Tuesday’s close was 7,712.57, so a gap toward 7,700 puts the index right on Wednesday’s starting point. With futures at 7,724.75, the cash index opens at the top edge of that zone. A break below 7,700 takes the S&P back toward the levels it held before its three-day win streak and leaves the October high of 7,844.52 1.9% overhead. A hold at 7,700 would let the index keep this week’s higher-low structure.

For the Nasdaq Composite, 26,140 is the line to watch. That is the October 16 close, the low of the worst week since June. A 1.7% decline from Wednesday’s 26,702.86 would leave the Composite at 26,249, 0.4% above that low. A loss bigger than 2.1% would erase the entire post-October 16 rebound. Nasdaq 100 futures at 29,506.75 have already given back 500.25 points, more than Wednesday’s cash gain.

The Dow holds better. At 52,778, futures sit above Wednesday’s opening area, and the index’s mix of defense, industrials and healthcare gives it a floor that the tech-heavy indexes lack. A Dow that holds above 52,500 while the Nasdaq Composite drops 1.5% or more would confirm the session as a rotation rather than a broad liquidation.

Sentiment was cautious before the selloff. The latest AAII survey showed bullish investors easing to 36.9% from 38.7%, below the long-term average of 37.5%, after hitting 28.8% five weeks ago, the lowest since September 2025. Bears rose to 45.8% from 41.6%, still below the 53.3% reading five weeks ago, the highest since May 2025. The neutral camp fell to 17.3%, its lowest since early April. When bears outnumber bulls by 8.9 percentage points heading into a gap-down, there is less forced selling from retail, but also fewer buyers ready to step in.

The VIX at 18.15 is elevated but not in panic. It sits well below the levels of a true risk-off event even after its 8.8% jump. Crypto is trading as a high-beta risk asset. Bitcoin fell $1,685.79, or 2.02%, to $81,695.40, down from Wednesday’s level above $83,000, as the AI unwind spilled into speculative assets. On the IPO front, Anthropic could file publicly for its listing as soon as Friday, adding another large AI supply event to a market already absorbing billions of dollars in new AI stock, including SpaceX and SK Hynix’s planned U.S. listing.

Session Verdict: A Bearish Tech Open With a Defensive Rotation Underneath

Heading into Thursday’s open, the verdict is bearish for tech and mixed for the broader market. Wednesday’s session was clearly bullish: the S&P 500 gained 0.58% to 7,757.17, the Nasdaq Composite rose 1.05% to 26,702.86, the Dow added 360.21 points to 52,856.09, and SpaceX’s $14.58 billion quarter revived the AI trade. Overnight, the setup reversed. S&P 500 futures are down 1.1%, Nasdaq 100 futures are down 1.7%, and Dow futures are down 0.7%, led by the same AI names that powered Wednesday.

The driver is the capex bill, not weak revenue. Meta beat with $64.60 billion in revenue and still raised its spending floor to $135 billion. Tesla beat at $0.48 a share and cut both its capex and its long-term vehicle ambition, which the market read as a slower ramp. Lam Research posted a record $8.22 billion quarter and guided to a range whose low end sits below it. IBM beat on revenue and EPS while its CEO said enterprise customers are questioning their AI returns. SK Hynix fell 9.2% and Tokyo Electron fell 6% before New York had a chance to respond. In each case the numbers were good and the stocks fell.

Underneath the tech selloff is a rotation. Lockheed Martin’s record $292 billion backlog, CSX’s 39% operating margin, Dow Inc.’s 18% packaging growth and Spotify’s 22% sequential operating-income guide are drawing buyers into defense, transports, chemicals and selected consumer platforms. Energy has a tailwind from Brent at $111.90. Treasuries are rallying to a 5.04% 10-year yield on haven demand, which gives rate-sensitive sectors and small caps support that megacap tech does not get.

The risks are on the downside for tech. Oil above $110, a Fed meeting October 27–28 with hike risk still in play, AAII bears at 45.8% and a VIX of 18.15 make a quick reversal unlikely in the chip complex. The S&P 500’s 7,700 level and the Nasdaq Composite’s 26,140 October 16 close are the lines that separate a one-day reset from a deeper unwind. With crude bid, yields falling and AI hardware getting hit on record numbers, the session sets up bearish for the Nasdaq, defensive for the Dow and mixed for the S&P 500, with leadership narrow and the burden of proof on the AI bulls to defend Wednesday’s lows.

That's TradingNEWS