Key Highlights

● Vistra traded around $140.60 at midday on October 22, down from $156.14.

● Morgan Stanley kept Overweight and trimmed its target to $226 from $227.

● Utilities as a group rose as falling Treasury yields drew investors to defensives.

● NextEra Energy, Duke Energy and Dominion climbed while Vistra traded with technology.

Vistra (NYSE:VST) tumbled on Thursday, October 22, 2026, as the AI power trade unwound across the S&P 500. The Texas-based power producer traded around $140.60 at midday, down from a prior close of $156.14, and stayed under heavy pressure through the afternoon.

The drop stood out because utilities as a group were among the market's winners. The S&P 500 utilities sector rose as falling Treasury yields drew investors to defensive, income-paying stocks. Vistra, which many investors have treated as a way to profit from the electricity needs of AI data centers, traded with technology instead.

A small price-target trim, not a downgrade

Some reports headlined a Morgan Stanley note on Vistra as a downgrade. In fact, Morgan Stanley kept its Overweight rating and trimmed its price target by just $1, to $226 from $227. That change was far too small to explain the slide.

The bigger driver was the mood around AI spending. Meta Platforms (NASDAQ:META) reported on Wednesday evening that it had narrowed its 2026 capital spending range to $135 billion to $145 billion. Its free cash flow was negative $2.12 billion, its first cash outflow in more than a decade, according to market data. Lam Research (NASDAQ:LRCX), a key chip-equipment maker, issued guidance with a midpoint slightly below consensus and cited supply constraints.

Then Nvidia (NASDAQ:NVDA)'s chief executive said, "The demand of the capital is much greater than the availability of the capital."

Power stocks fell together

Vistra was not alone. GE Vernova (NYSE:GEV) plunged and finished among the weakest S&P 500 stocks. Vertiv (NYSE:VRT), Eaton (NYSE:ETN) and Quanta Services (NYSE:PWR) all slid, and MasTec (NYSE:MTZ), Dycom (NYSE:DY) and Primoris (NYSE:PRIM) hit 52-week lows.

Independent power producers such as Vistra sell electricity into wholesale markets, and the group has been closely linked to data-center demand. When investors fear AI spending may cool, those stocks tend to move with chip and data-center names rather than with traditional utilities.

Traditional utilities did well. NextEra Energy (NYSE:NEE) rose after saying it expects full-year results at the top of its guidance range, and it was also helped by reports that a blockade of wind projects was easing. Duke Energy (NYSE:DUK) and Dominion (NYSE:D) also climbed.

A two-speed market

The S&P 500 fell 93.74 points to 7,663.43, its worst day since July. The Nasdaq Composite tumbled 694.00 points to 26,008.86, its steepest drop since June 5, and the index lost about $1 trillion in market value. The Dow Jones Industrial Average edged up 11.89 points to 52,867.98.

Yet about two of every three S&P 500 stocks rose, according to market reports. Staples posted their best day since April 2025, health care hit a record, and homebuilders rallied as the 10-year Treasury yield fell back below a closely watched threshold for the first time since September 22.

Vistra Watches Hyperscaler Spending Plans

The key test for Vistra is whether the biggest AI spenders keep their plans intact. Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) report on October 28, and Amazon (NASDAQ:AMZN) reports on October 29. Their capital spending guidance will be read closely by investors in power producers.

The Federal Reserve also announces its decision on October 28 after a two-day meeting. Lower Treasury yields helped utilities on Thursday, and any shift in the rate outlook could change the appeal of power stocks.

Energy prices remain in focus too. Brent crude rose to $113.17 on Thursday, its highest since May 4, as Houthi attacks in Saudi Arabia and a media report on possible renewed strikes on Iran kept traders on edge.