Key Highlights

● Nine of 11 S&P 500 sectors gained in October.

● Only technology and communication services fell.

● The Dow rose about 864 points for the month.

● The Nasdaq lost about 1,424 points.

October 2026 was a good month for most of the stock market and a bad one for its biggest names. Nine of the 11 major S&P 500 sectors gained, according to market data. Only technology and communication services fell, with communication services posting its worst month since April 2022, according to market data.

The split showed up in the indexes. The Dow Jones Industrial Average rose about 864 points for the month and the Russell 2000 edged up about 15 points. The Nasdaq Composite, heavy with technology and internet stocks, fell about 1,424 points, its worst month since March 2025, ending a two-month winning streak. The S&P 500 slipped about 71.5 points, dragged down by its largest members.

The cash-flow problem

The common thread for the two losing sectors was AI spending and what it is doing to cash flow. Meta (NASDAQ:META), a leading communication services stock, reported its first negative quarterly free Cash Flow since 2012 in late October. Alphabet (NASDAQ:GOOGL), the sector's largest company, reported third-quarter free cash flow of negative $9.1 billion against expectations of negative $3.5 billion, with Capital spending of $51.4 billion. Its shares had their worst day ever on Thursday, October 29, losing about $500 billion in market value.

In technology, Intel (NASDAQ:INTC) warned after Thursday's close that it would burn cash this year, citing a weak PC market, Manufacturing bottlenecks and a factory accident in Israel. Its shares posted their biggest one-day drop on record on Friday, and the Philadelphia Semiconductor index fell steeply to 10,688.80, capping a heavy monthly decline for chipmakers.

A market analyst said that "Together, Amazon (NASDAQ:AMZN), Google, Microsoft (NASDAQ:MSFT) and Meta spent more than $200bn in the third quarter alone," and that "the risk is that higher financing costs will absorb more of the cash generated."

The final-day blow

Friday, October 30, 2026, delivered the month's sharpest hit. The S&P 500 fell 140.32 points to 7,580.07, the Dow dropped 572.25 points to 51,770.31 and the Nasdaq Composite lost 747.73 points to 25,437.00, its worst day since June 5. Technology was the worst sector on the day. The Nasdaq-100 lost roughly $2 trillion in Market Value over the month, according to market data.

A senior market strategist said: "The love-hate relationship with tech and AI continues, and investors are becoming more discerning following earnings." He also said the tech decline "does not appear abnormal" compared with earlier bull-market pullbacks.

Where the money went

The winners were the sectors furthest from the AI build-out. Energy posted the strongest monthly gain, helped by oil prices that rose above $100 a barrel on tensions involving Iran and the Strait of Hormuz. Health care, utilities and consumer staples each posted strong gains, according to market data. Health care reached a record high on Friday, according to market data.

Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) briefly touched record highs on Friday after reporting Earnings above estimates, with Exxon posting record refining results. Staples such as Mondelez (NASDAQ:MDLZ) and Colgate-Palmolive (NYSE:CL) rose on results, while Coca-Cola (NYSE:KO), PepsiCo (NASDAQ:PEP) and Walmart (NASDAQ:WMT) gained in the rotation.

The Federal Reserve held rates steady at its October 27-28 meeting, but two officials dissented in favor of a hike and markets priced in a December increase. Higher borrowing costs tend to weigh on companies whose value depends on distant profits.

What to watch

November opens with Apple (NASDAQ:AAPL)'s results on Monday, November 2, and Palantir (NASDAQ:PLTR)'s the same day. The midterm elections on Tuesday, November 3, could affect sentiment toward AI names, and the October jobs report arrives Friday, November 6. Anthropic's planned Nasdaq listing, targeted for the week of November 16 according to market data, will offer another read on appetite for AI stocks.