Wall Street Ends Lower as AI Spending Concerns Persist, Fed Meeting Looms

Wall Street’s main indexes ended the final session of a rocky week in the red, with the technology sector steadying only marginally as lingering questions over AI investment costs and a busy calendar of earnings and monetary policy kept buyers on the sidelines.

The Nasdaq Composite posted a slim loss, a day after suffering its biggest one-day drop since June. The S&P 500 technology sector eked out a 0.35% gain on Friday, but most other sectors declined. Consumer staples, consumer discretionary and financials each fell more than 1%.

The Dow Jones Industrial Average dropped 652.82 points, or 1.23%, to 52,215.16. The S&P 500 lost 39.75 points, or 0.52%, to 7,623.68. The Nasdaq Composite fell 53.52 points, or 0.21%, to 25,955.34.

For the week, the S&P 500 declined 0.5% and the Nasdaq shed 0.7%, while the blue-chip Dow posted a 0.4% gain — its third consecutive weekly advance.

AI Spending Under the Microscope

Concerns over the cost of financing heavy AI infrastructure spending weighed on sentiment. “There is still fallout from the questioning of the AI trade,” said Kristina Hooper, chief market strategist at Man Group. “There’s certainly the potential that we see less invested in an AI data center build-out next year than has been projected. So I certainly think that’s giving pause.”

Investors are now training their attention on next week’s earnings reports. About one-third of S&P 500 companies are scheduled to post quarterly results, including Alphabet, Microsoft and Amazon — three AI hyperscalers whose capital expenditure forecasts will be closely watched.

Fed Decision and Earnings Season in Focus

The Federal Reserve is widely expected to hold interest rates steady when it releases its policy statement on Wednesday. Market participants will be looking for clues on whether the central bank could raise rates at its December meeting.

Third-quarter earnings have been robust, with S&P 500 companies on track to post profit growth of more than 32%, according to LSEG IBES data.

The November 3 midterm elections, which will decide control of the U.S. Congress, are also drawing increasing attention from investors.

Telecoms Slump, Energy Surges

Telecommunications stocks fell sharply, dragging on the communication services sector, after a report that SpaceX was seeking thousands of cell sites for a fourth wireless carrier. Shares of AT&T and T-Mobile each dropped nearly 8%, while Verizon shed 1.2%. SpaceX shares gained 1.9%. U.S. cell tower operators rose, with Crown Castle up 9% and American Tower up 4%.

The energy sector climbed 2.5%, hitting a record high. Brent crude oil rose to its highest level since late April after Houthi attacks in Saudi Arabia heightened fears of further supply disruptions from the Middle East.

Other Movers

American Express fell 3.7%, weighing on the Dow. The company raised its profit forecast while also announcing plans to eliminate 5% of its workforce.

SLB shares jumped 7% after the oilfield services provider beat Wall Street estimates for third-quarter profit.

Consumer sentiment edged down near a record low in October, according to the University of Michigan, as rising prices tied to the Middle East conflict weighed on households’ views of the economy.

Market Breadth

Declining issues outnumbered advancers on the New York Stock Exchange by a 1.72-to-1 ratio, and on the Nasdaq by 1.57-to-1. The S&P 500 recorded 18 new 52-week highs and 8 new lows, while the Nasdaq Composite logged 74 new highs and 334 new lows.

Volume on U.S. exchanges totaled 15.4 billion shares, below the 17.2 billion average over the prior 20 trading days.