October dive for AI-related shares tests broader US stock market's resilience
SPY•The S&P 500 technology sector fell 6.8% in October, its biggest monthly drop since March 2025, while nine of 11 sectors and small- and mid-cap indexes rose. Investors are watching whether weaker AI shares and spending plans could pressure the broader market.
1. Tech shares slide
Disappointing results from Alphabet, Amazon and Intel added to declines in AI-related stocks, as investors questioned the financing needs and potential returns from heavy investment spending. The S&P 500 technology sector fell 6.8% in October, its biggest monthly decline since March 2025.
2. Broader market holds up
Nine of the S&P 500's 11 sectors gained in October, and more than 70% of its constituents rose. Small- and mid-cap indexes also advanced, helping the S&P 500 limit its monthly decline to less than 1%. The technology sector accounts for 38% of the S&P 500.
3. AI spending in focus
Investors are watching for signs that major technology companies may pull back on capital spending, which the article describes as a driver of economic growth and earnings across multiple areas. Oxford Economics estimates about one-third of recent US economic growth stems from AI. On Friday, the S&P 500 closed below its 100-day moving average for the first time since April.
