Tech Jitters Knock the Nasdaq; Dow Climbs while the S&P Treads Water

Investor’s Business Daily, Reuters, CNBC, and Bloomberg contributed to this report.

Stocks split in different directions Tuesday. The Nasdaq Composite slipped 0.5% as big tech lost steam after Monday’s pop, the S&P 500 hugged the flatline, and the Dow Jones Industrial Average did its own thing — up 359 points, or 0.8%.

The pain point was AI. Cloud upstart CoreWeave sank 13% after guidance underwhelmed, rattling the broader “AI trade.” Nvidia, the group’s bellwether, fell about 3% after SoftBank revealed it dumped its entire stake for more than $5 billion. The sympathy move hit other names tied to the theme: Micron and Oracle each fell roughly 4%, Palantir slipped about 3%, and the S&P tech ETF (XLK) was down near 1%.

“Great companies, great cash flow—but starting valuations matter,” said Bill Fitzpatrick of Logan Capital on CNBC.

Fitzpatrick warned that even a small negative headline can flip sentiment and push money toward cheaper, old-school “value” stocks. With the S&P 500 trading north of 20x earnings — skewed by the Magnificent Seven — he added that any pullback in expected AI capex over the next couple of years could signal that the market got ahead of itself.

A softer labor read didn’t help risk appetite. ADP’s tracker showed that for the four weeks ending Oct. 25, private-sector job creation ran negative — down a little over 11,000 on average per week — contradicting gains the firm flagged earlier in the month and hinting at a cooler jobs backdrop. Consumer mood has been wobbling, too: the University of Michigan’s sentiment index slumped more than 6% in November, with respondents fretting that the long federal shutdown would weigh on growth.

Politics were a swing factor on Monday and a sideshow today. Hopes the record-setting government shutdown is wrapping up — after the Senate passed a bill to reopen agencies and send it to the House — helped fuel yesterday’s broad rally as traders piled back into “risk-on” names. The current deal skips Democrats’ push to lock in Affordable Care Act subsidies now and punts a vote on the tax credits to December.

Outside megacaps, there were bright spots. Rocket Lab jumped after beating Q3 expectations and guiding revenue above consensus, extending a monster multi-month run. But the broader tone belonged to tech sellers taking profits and reassessing the AI spending boom.

Bottom line: Tuesday looked like a reset after Monday’s relief surge — Dow up on rotation, the S&P marking time, and the Nasdaq giving back a slice as investors test just how much AI optimism they’re willing to pay for at 20-plus times earnings.