Key Highlights

● Technology was the S&P 500's worst sector, and chips fell most since June 23.

● Consumer staples had their best day since April 2025 and hit a record high.

● The S&P 500 logged 40 new 52-week highs against just four new lows.

● The 10-year yield slipped below a key level for the first time since September 22.

A market strategist did not need many words to describe the market on Thursday.

"People are running away from tech," the strategist said.

The data made the case. On Thursday, October 22, the technology sector was the worst performer in the S&P 500, and the Philadelphia Semiconductor Index suffered its biggest one-day drop since June 23. The Nasdaq Composite tumbled 694 points to 26,008.86, its steepest drop since June 5, and the S&P 500 fell 93.74 points to 7,663.43, its worst day since July.

What they ran from

The exodus centered on AI and chip stocks. Meta Platforms (NASDAQ:META) sank after reporting negative free cash flow and about $825 billion in spending commitments. Lam Research (NASDAQ:LRCX) plunged after citing supply constraints in its outlook. Nvidia (NASDAQ:NVDA) traded at $212.21 and was the single biggest drag on the S&P 500, according to market data, after CEO Jensen Huang said "The demand of the capital is much greater than the availability of the capital."

AI power names, including GE Vernova (NYSE:GEV) and Quanta Services (NYSE:PWR), also fell hard, and engineering firms MasTec (NYSE:MTZ), Dycom (NYSE:DY) and Primoris (NYSE:PRIM) hit 52-week lows. The iShares AI Innovation ETF dropped sharply.

Where they ran to

The money did not leave the market. It moved. Consumer staples had their best day since April 2025 and hit a record high, led by Procter & Gamble (NYSE:PG). Health care also set a record despite a steep drop in Moderna (NASDAQ:MRNA). Utilities and financials rose.

Homebuilders rallied as Treasury yields fell, with Lennar (NYSE:LEN) and PulteGroup (NYSE:PHM) among the gainers. Railroads climbed after strong results from CSX (NASDAQ:CSX) and Union Pacific (NYSE:UNP).

The Dow Jones Industrial Average edged up 11.89 points to 52,867.98, and the Russell 2000 crept higher. About two of every three S&P 500 stocks rose, according to market data, and the equal-weight S&P 500 gained.

The breadth puzzle

On a typical day when the S&P 500 drops this much, losers swamp winners. Thursday was different. The S&P 500 logged 40 new 52-week highs against just four new lows. Another count showed 47 new highs, the most since July.

On the Nasdaq, where tech dominates, the picture was weaker: 2,022 stocks rose and 2,766 fell. It was the 39th straight session with more new lows than new highs on that exchange.

It was described as the most bifurcated session since July.

Bonds joined the rotation

The flight from tech also showed up in bonds. Treasuries rallied strongly, and the 10-year yield closed back below a closely watched threshold for the first time since September 22.

"Treasuries rallied overnight as tech stocks came under pressure amid renewed AI valuation fears," one rates strategist said.

Others urged caution about reading too much into a single session. "Buying the dip here has [a] pretty good record of working," one market commentator said. Another said "it will take more than one or two days to change the trend."

Big Tech Earnings Decide the Rotation

Whether investors keep running depends on next week's big tech results. Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) report on October 28, alongside the Federal Reserve's decision, and Amazon (NASDAQ:AMZN) reports on October 29. Strong AI revenue could draw buyers back to tech, while more spending surprises could extend the rotation into defensive sectors.