Nasdaq falls nearly 3% on AI spending fears; Brent hits $113

Meta led the slide: Meta fell about 8%, its largest drop since July, Reuters reported. A day earlier it said it would issue a new class of non-voting shares to help fund AI spending and raised the low end of its annual capital spending forecast to $135 billion, with the top end at $145 billion. Its third-quarter free cash flow was negative $2.12 billion, which Reuters said was Meta's first cash burn in more than a decade. Reuters also said the cost of insuring Meta's debt against default, measured by credit default swaps, hit a record on Thursday.

Huang's warning added pressure: Nvidia CEO Jensen Huang told CNBC that demand for the AI cloud companies known as neoclouds is "off the charts," but that "there's a scarcity of capital. The demand [for] the capital is much greater than the availability of the capital." Wells Fargo traders wrote that the remark was "spooking markets." CoreWeave fell more than 10%, CNBC said, and power companies tied to data centers also sank: GE Vernova and Bloom Energy each dropped more than 11%, and Vistra more than 10%. Nvidia fell about 4% and AMD more than 8%.

Oil and bonds: Brent crude rose 4% to settle at $113.17 a barrel, its highest since May 4, and U.S. crude rose 2.4% to $99.47, CNBC reported. Prices jumped after The New York Times, citing unnamed sources, reported that the U.S. and Israel plan renewed strikes on Iran after the Nov. 3 midterms; neither government has confirmed it. President Trump told reporters Wednesday night that the U.S. is not negotiating with Iran and that "something will happen fairly soon." Investors piled into Treasurys, pushing the 10-year yield down about 0.18 percentage point to about 4.97%, below 5% for the first time in nearly a month, CNBC and the Journal reported.

How the day unfolded: Wednesday evening, Meta's results and share plan came out, and Meta briefly rose 3% after hours. Overnight, Asian chip stocks fell and Japan's Nikkei dropped 2.6%. At the 9:30 a.m. ET open, the Nasdaq was down 1.5% (CNBC). By 10:45 a.m. it was down 2.2% (AP). After Huang's CNBC interview and the Iran report, the slide deepened to about 2.9% by 3:55 p.m.

The bear and bull case: "More spending, negative free cash flow, not enough revenue being generated from the spend (is) concerning investors that this is just sort of a bit of a money pit," Robert Pavlik of Dakota Wealth told Reuters. Nomura strategist Charlie McElligott wrote that markets were pricing in a possible U.S. "growth scare" from an AI pullback. On the other side, the broader economy looked solid: weekly jobless claims fell to 194,000, the lowest since mid-July, the Labor Department reported. Blackstone President Jon Gray told Bloomberg Television that AI is not a bubble because companies are "building capacity, and you're hoping you can keep up with the demand."

What's still unknown: Whether the AI selloff deepens or fades like earlier scares, and whether the reported Iran plans are real. Alphabet, Microsoft and Amazon, three of the biggest spenders on data centers, report earnings next week, Bloomberg noted, and the Federal Reserve also meets next week.

Updated 1:20 p.m. PT Oct. 22 with late-session figures. Index moves are from CNBC at 3:55 p.m. ET, minutes before the close; official closing levels may differ slightly. Brent and U.S. crude figures are settlement prices reported by CNBC. The report of planned U.S. and Israeli strikes on Iran comes from The New York Times citing unnamed sources and has not been confirmed by either government. The hero photo shows the Nasdaq MarketSite studio in 2015, not Thursday's trading.