Dow Gains as AI Selling Weighs on the Nasdaq and Chip Stocks

A split market offered a clear signal on Monday: enthusiasm for artificial intelligence remains strong, but investors are asking harder questions about its cost and payoff. The Dow Jones Industrial Average advanced 0.4% to 51,983, while the S&P 500 slipped 0.5% to 7,541 and the Nasdaq Composite lost 1.1% to 25,164. Early gains across the major indexes faded as the session wore on.

Oil prices eased sharply amid renewed hopes for a diplomatic path out of tensions in the Persian Gulf. The front-month West Texas Intermediate crude futures contract fell 8% to $95.84 a barrel. Treasury yields moved in different directions: the two-year yield rose 1.3 basis points to 4.594%, while the 10-year yield fell 2.5 basis points to 4.904% and the 30-year yield dropped 2.9 basis points to 5.28%.

For investors, lower oil prices offered some relief, but they didn’t settle the market’s bigger concerns. Chris Larkin, managing director at E*TRADE from Morgan Stanley, said the market’s longer-term positive outlook still appeared intact. The near-term problem, in his view, is sustaining momentum when oil prices, inflation, questions about AI spending and geopolitical tensions can all unsettle trading.

AI-related shares pulled in different directions

Technology stocks were uneven, even among the biggest companies. Apple fell 1.8% and Nvidia declined 1.3% as semiconductor shares faced another difficult session. Apple was due to report fiscal fourth-quarter results after the closing bell, and its market value moved back and forth with Nvidia’s near the top of the global rankings.

Other large technology names also struggled. Alphabet slipped 0.3%, Meta Platforms lost 1.3% and Microsoft fell 2.8%. Those declines reflect persistent investor questions about the scale of spending on artificial intelligence, the effect on cash flow and how quickly the investments may produce returns. The share price moves don’t answer those questions, but they show that investors are weighing the costs alongside the promise.

There were gains elsewhere in the group. Amazon rose 2.2% and Tesla added 1%, showing that large technology companies didn’t all move together. Palantir Technologies, which also has significant exposure to AI, fell 3.1% ahead of its scheduled earnings report after the market close.

Outside the largest technology names, company-specific news helped drive some striking moves. Idexx Laboratories gained 21.9% after the pet healthcare company reported third-quarter results that beat expectations and raised its full-year outlook. Sherwin-Williams climbed 6%, the strongest performer among Dow components. Materials, financial, industrial, consumer staples and real estate shares, along with consumer discretionary stocks, each rose by more than 1%.

That breadth helped the Dow finish higher even as weakness in technology shares dragged down the Nasdaq and the broader S&P 500. A single day’s index performance can therefore hide very different experiences across sectors and companies.

Marvell and Lumentum announce a share deal

Marvell Technology said it would acquire Lumentum Holdings in a transaction intended to combine their electrical and optical capabilities for the demanding connections used in next-generation AI infrastructure. The announcement didn’t lift either company’s shares: Marvell dropped 12.7% and Lumentum fell 18.6% on Monday.

Under the terms described, Lumentum shareholders would receive 4.5 Marvell shares for each Lumentum share. The deal values Lumentum at about $1,132 a share, roughly 24% above the companies’ closing prices on October 28.

Marvell says the combined business would bring together CMOS, silicon photonics, compound semiconductors, advanced packaging and manufacturing capabilities. The company expects the portfolio to support connectivity over a range of distances, including between distributed data centers. Management also projects more than $1 billion in annual cost savings once the savings reach their expected run rate, and says the transaction should increase revenue growth and margins over the long term. It expects the deal to add to earnings in its first year after closing.

Those are management’s expectations, not outcomes investors can take for granted. The steep share declines after the announcement show that a strategic fit and projected savings don’t automatically persuade the market. Investors will have to assess how the companies combine their operations and whether the expected growth and savings materialize.

Anthropic pairs rapid growth with a large reported loss

Anthropic reported third-quarter revenue of $16.96 billion in an updated registration document filed Monday. That was about 1,127% higher than a year earlier. Yet growth slowed from quarter to quarter: it was 47% in the third quarter, compared with 144% in the second quarter and 132% in the first. The company also reported a net loss of $23.29 billion.

The figures put two different parts of the AI story side by side. Revenue growth has been extraordinary, while the reported loss and the slowdown in sequential growth raise questions about costs and how durable the pace of expansion will be. Investors considering the company’s prospective public shares will need to weigh both sides of that picture; rapid sales growth alone doesn’t establish what future earnings may look like.

Apple and Palantir were among the companies with results scheduled after Monday’s close, giving investors more company-specific information to assess. This week also brings an October jobs report on Friday. With oil, economic data, corporate results and AI spending concerns all in focus, the market’s ability to hold on to gains may matter as much as any one index’s closing move.