Stock Market Today, Oct. 16: Tech Stocks Plunge as AI Software Valuations Reverse

The S&P 500 (^GSPC -1.09%) experienced a decline of 1.09% to 7,661 points on October 16, as valuations for AI software stocks took a significant downturn. The Nasdaq Composite (^IXIC -2.15%) saw an even steeper drop of 2.15% to 26,140, driven by widespread selling across the technology sector. The Dow Jones Industrial Average (^DJI -0.34%) slipped 0.34% to 52,002.

Gold prices rose 0.43% to $4,187.90, while the 10-Year Treasury yield fell to 5.10%. Among the sector leaders, Energy stocks gained ground, while Communication Services faced the steepest declines. Technology stocks suffered particularly significant weakness. Alcoa (AA +2.55%) shares rose 5.80% following a strong third-quarter earnings report, while Fox Factory (FOXF -13.30%) declined after announcing the unexpected departure of its CEO and a more subdued outlook.

Notably, Palantir Technologies (PLTR -7.22%) entered correction territory as valuations for software stocks retreated. Ford (F +0.97%) saw a 2% increase as investors shifted towards more stable blue-chip companies. Neocloud CoreWeave (CRWV -11.91%) ended the week down 25%, after Goldman Sachs (GS -1.12%) reported that hedge funds were selling AI stocks at the second-fastest rate in over a year, considering the move a tactical pivot away from smaller AI names towards more stable options like the Magnificent Seven or non-AI stocks.

Netflix (NFLX -2.87%) appointed former Disney (DIS -0.08%) chair Peter Rice as its new chief content officer, yet NFLX shares fell 3% despite the announcement. Apple (AAPL +0.43%) reported that preorders for the iPhone Duo, priced at $1,999, sold out within minutes. However, analysts and experts suggest this may be more indicative of supply constraints than a surge in demand for the next-generation iPhone.

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