Friday's damage across the indexes

A sell-off of tech stocks that began earlier this month and gathered pace with disappointing earnings from leading technology companies drove US markets down by hundreds of billions of dollars on Friday.

• •The S&P 500, the index of the 500 most valuable US companies, fell by more than 1%, shedding hundreds of billions of dollars in market value
• •The Nasdaq composite was dragged down further, losing more than 3%
• •The Dow Jones Industrial Average fell less than the Nasdaq
• •The S&P 500 was on track to erase its October gain, even though it set its all-time high during the same month

The Nasdaq's month-long reckoning

The week's damage on the tech-heavy Nasdaq exchange amounts to nearly $1tn in lost value, while about $2tn has been erased in a month.

The slide is not confined to the flagship composite. More than $2tn in market value is set to be wiped from the Nasdaq 100 this month as big tech earnings intensify investor scrutiny of AI spending - a sum slightly larger than SpaceX's entire market value. The Nasdaq 100 has fallen more than 5.8% so far in October.

Earnings that turned investors against tech

The company-level reports under the tech sell-off have been punishing. Intel tumbled nearly 30%, flirting with its worst day since 1974, despite reporting stronger-than-expected quarterly profit - its forecast for profit in the final three months of the year fell far short of analysts' expectations.

• •Alphabet's stock dropped more than 12% the day before Friday, wiping $500bn from its market capitalization in its worst day on record; the company said it burned through more cash in the summer than in the spring because of mammoth AI investments
• •Amazon fell 1.8% after reporting a weaker-than-expected summer profit and disclosing higher-than-anticipated spending this year
• •Meta Platforms, Alphabet and Amazon have all raised spending forecasts as they race to expand AI infrastructure

What is driving the worry

At the heart of the Nasdaq and S&P 500 decline is whether hundreds of billions of dollars in AI spending will produce enough profit and productivity to make the investment worth it. Chipmaker and datacenter supplier stocks are under pressure on concerns that high interest rates may slow the further build-out of data centers.

Nvidia, previously worth about $5tn, dropped 3.1% and was the heaviest force pulling the S&P 500 downward. The rest of Wall Street had a roughly mixed day, with the S&P 500 roughly evenly split between gainers and losers.

Those expectations for bigger US corporate profits are what drove the S&P 500 to its record earlier this month, despite global discouragement over inflation and fuel prices.