S&P 500 falls 1.2% as AI stocks drag index despite broad gains
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The gist
The S&P 500 fell 1.2% on Thursday even as 335 of its constituents closed higher.
A few AI giants now outweigh most stocks in the index.
Background
The S&P 500 is a market-cap-weighted index of 500 large U.S.-listed companies, and its top 10 holdings make up roughly 40% of its value — so a drop in a few AI and semiconductor giants can pull the whole index down even when most companies rise. That split has become the market's defining feature as the AI trade retreats: the equal-weighted S&P 500 was up 4.1% this quarter while the cap-weighted version was slightly down. The Oct. 22 selloff followed Meta's roughly 7% drop after AI capital spending drove its first cash outflow in more than a decade.
How it unfolded
- Oct 6, 2026The S&P 500 hit a new all-time high.
- Oct 22, 2026The index fell 1.2%, its worst day since July, while the Nasdaq Composite dropped 2.6%; 335 S&P 500 constituents (about two-thirds) still closed higher.
- Oct 22, 2026Meta fell about 7% on AI capital spending, and the Philadelphia Semiconductor Index plunged 6.72%, leaving it more than 26% below its June high — a technical bear market.
- Oct 23, 2026FactSet reported 24% of S&P 500 companies had posted Q3 results, with 83% beating EPS estimates and a blended earnings growth rate of 29.5%.
- Oct 29, 2026The S&P 500 was about 2% below its Oct. 6 record.
Who’s saying what
- Analysts
- Goldman Sachs trader Matthew Kaplan called the session an anomaly worth recording, noting it marked the widest gap between S&P 500 market breadth and index performance since the 1990s.
- Analysts
- FactSet's John Butters said results are mixed versus expectations — earnings surprises are above recent averages in frequency but below them in magnitude.
- Caution
- The Motley Fool argued perfect market timing doesn't exist, noting that investing in the S&P 500 early and often was only 8.3% behind perfect timing.
Still unverified
The source reports the index fell 1.2% in one passage but quotes Goldman Sachs' trading desk saying it "still fell 1.5%" in another.