Meta's spending shock sinks the Nasdaq 2.6% as money runs to Treasuries

Wall Street was shaken last night as doubts about AI spending came roaring back. The Nasdaq fell 2.6%, its biggest drop since June, and the S&P 500 lost about 1.3%. A day earlier, SpaceX and Super Micro had sparked a 1% rebound, and that mood flipped in a single session.

The spark was Meta. Third-quarter revenue rose 26% and its fourth-quarter outlook beat expectations, but quarterly capex jumped 80% to $34.9 billion and free cash flow, the money left over after spending, turned negative. News that it will issue a new class of non-voting shares to fund AI investment added worries about dilution. Tesla slipped after hours despite beating forecasts.

Debt worries linger too. Short sellers have pocketed $6 billion betting against neocloud stocks, and CoreWeave's bonds now yield about 15%. On the other side, chip-equipment maker Besi said orders beat expectations on AI data-center demand, so some argue demand itself hasn't cracked.

Money ran for safety. The 10-year Treasury yield fell below 5% in its biggest one-day drop since the SVB collapse. Meanwhile, Houthi attacks on Saudi Arabia led Aramco to evacuate its headquarters, pushing Brent above $111, close to its Iran-war high.