Nasdaq's October loss was nearly six times the S&P 500's as Big Tech cash flow went negative

The Nasdaq Composite closed October 5.3% lower, while the S&P 500 lost 0.9% over the same month, according to FRED and Yahoo Finance data. More than half of the Nasdaq's point loss came on Friday, October 30, when it fell 2.9%.

One Friday session did more than half the damage

The Nasdaq Composite closed at 26,861.06 on September 30, according to FRED, the data service of the Federal Reserve Bank of St. Louis. It stood at 26,184.72 on Thursday, October 29, and ended Friday at 25,437.00, a drop of 747.7 points, or 2.9% on the day, according to Yahoo Finance data read after the close.

The S&P 500 closed September at 7,651.54 and Friday at 7,580.07, which is 0.9% lower over the month (computed). On Friday alone it fell 1.8%.

Measured from the September 30 close, the Nasdaq's October loss of 5.3% (computed) was nearly six times the S&P 500's 0.9% (computed). Index levels from Yahoo Finance are not the exchanges' official closing values and can differ slightly.

Three of the biggest AI spenders reported negative free cash flow

The gap between the two indexes runs through the companies that spend most on artificial intelligence. Their quarterly releases, filed with the US Securities and Exchange Commission, show how far spending has moved ahead of cash generation.

Alphabet reported free cash flow, which is operating cash flow less purchases of property and equipment, of negative $9.065 billion for the quarter ended September 30. Its purchases of property and equipment were $51.355 billion, up 114.4% (computed) from $23.953 billion a year earlier.

Amazon said free cash flow was an outflow of $42.4 billion over the trailing 12 months, "driven primarily by a year-over-year increase of $94.8 billion in purchases of property and equipment." Meta reported negative free cash flow of $2.12 billion for the quarter and expects 2026 capital expenditures of $135 billion to $145 billion.

FinanceInTime covered the figures in detail in an analysis of the four biggest spenders. Neither the releases nor the index data show whether those results drove Friday's move, and the timing differs: Meta reported on October 21, Alphabet on October 28 and Amazon on October 29.

The calendar after the drop

Two dated events follow. The Bank of England's next interest-rate decision is due on November 5, according to the Bank of England. The US Bureau of Labor Statistics is scheduled to publish the October employment report on November 6 at 8:30 a.m. ET, according to its release schedule.

We would read the split between the indexes, not the size of Friday's drop

We think a single Friday is weak evidence, and the more useful fact is the width of the gap: the Nasdaq lost nearly six times what the S&P 500 lost in October. That points to a market whose direction depends on a few large companies' spending plans and cash flow rather than on rates or the broad economy.

The threat is crowded positioning: if spending keeps outrunning cash generation, further results could repeat the repricing. The opportunity is that a market where only part of the index has fallen can still broaden gains toward areas that did not rise with AI spending. We expect the gap to stay wide through November if the next spending updates show no slowdown, and we would change that view if the S&P 500's loss began to match the Nasdaq's, which would point to a macro cause.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.