[US Stocks] Nasdaq plunges 2.6% following major tech earnings, while the Dow edges higher as long-term yields fall below 5% (October 22)
The US stock market on October 22 saw a significant divergence between major indices. Following earnings reports released after the previous day’s close from major tech and semiconductor companies, broad selling in technology stocks caused the Nasdaq to tumble 694.00 points (2.60%) from the previous day, while the S&P 500 fell 1.21%, marking its first decline in four trading sessions. On the other hand, the significant drop in US long-term interest rates encouraged capital inflows into financial, value, and small-cap stocks, allowing the Dow to finish slightly in positive territory, up $11.89 (0.02%), and the Russell 2000 to gain 0.11%.
On the macro front, buying pressure for US Treasuries intensified in the bond market, causing the 10-year Treasury yield, which had risen to 5.146% the previous day, to drop sharply to 4.953%, falling below the psychological threshold of 5%. In addition to flight-to-safety buying, the market focused on economic data suggesting a slowdown due to the high-interest-rate environment and the stabilization of inflation expectations, pushing bond yields to their lowest level in about three weeks. Reflecting the narrowing interest rate gap between Japan and the US, the yen strengthened against the dollar in the foreign exchange market, moving from the low 158 range the previous day to 156.77 yen.
In the stock market, earnings announcements from companies like Meta Platforms, Tesla, IBM, and Lam Research renewed concerns over the burden of AI infrastructure investment and slowing profit margins, accelerating a sector rotation from tech stocks to value stocks. While regional bank stocks, real estate stocks, and traditional blue-chip stocks benefited from lower interest rates and supported the Dow, overall market volatility increased, with the VIX index surging to 19.03. Investors are rapidly shifting toward risk-aversion and stock selection while keeping a close eye on the profitability of tech companies and trends in the bond market.
📊 Market Summary (2026/10/22 Close)
DJIA: 52,867.98 (+11.89 / +0.02% from previous day)
S&P 500: 7,663.43 (-93.74 / -1.21% from previous day)
Nasdaq: 26,008.86 (-694.00 / -2.60% from previous day)
Russell 2000: 2,784.03 (+3.01 / +0.11% from previous day)
10-Year Treasury Yield: 4.953%
USD/JPY: 156.77 yen
⚠️ Risk Indicators
VIX: 19.03
HYG: 77.10
KRE: 72.41
PCR: 0.94 (Total)
Fear & Greed: 19
Market Trend Highlights:
❌️ Factors for Decline
❌️ Major tech earnings reignite concerns over AI investment burden and profitability
Selling intensified in major tech stocks such as Meta Platforms, Tesla, and IBM, which reported earnings after the previous day’s close, serving as the primary driver for the Nasdaq’s 2.60% decline. The market was disappointed that while massive capital expenditures on AI data centers and next-generation technologies continue, the corresponding short-term revenue contributions and profit margin improvements failed to meet high market expectations. For large-cap growth stocks that had been granted high valuations, institutional investors moved quickly to reduce positions due to concerns over the extended investment recovery period.
❌️ Chain reaction of selling in semiconductor stocks and sharp drop in the technology sector
Following earnings from semiconductor-related companies like Lam Research and Texas Instruments, cautious views spread regarding the pace of recovery in industrial and consumer demand and the state of the semiconductor market outside of AI. Selling spread to major semiconductor stocks such as Nvidia, Micron Technology, and AMD, causing the semiconductor sector, which had rebounded the previous day, to fall sharply again. The information technology and communication services sectors saw broad-based declines, weighing down the S&P 500 by 1.21%.
❌️ Sharp rise in VIX index and re-entry into ‘Extreme Fear’ territory
Market caution rose rapidly following the sharp drop in tech stocks, with the volatility index (VIX) jumping significantly from 16.68 the previous day to 19.03. In the options market, put buying to hedge against downside risk increased, causing the put-call ratio (PCR) to jump to 0.94, and the Fear & Greed index, which indicates investor sentiment, fell from 27 the previous day to 19, sinking back into ‘Extreme Fear’ territory. Ahead of earnings from companies like Intel after the close and economic indicators the following day, selling to close out positions in growth stocks accelerated.
⭕️ Factors for Rise
⭕️ US 10-year Treasury yield falls below 5%, bond market rebounds significantly
Strong buying entered the US Treasury market, particularly in long-term bonds, causing the 10-year Treasury yield to drop by approximately 0.19 percentage points from 5.146% the previous day to 4.953%, falling below the 5% threshold. In addition to flight-to-quality buying following the tech stock sell-off, there was a correction of excessively priced-in inflation and rate-hike concerns. The decline in long-term interest rates also had a positive impact on the corporate bond market, with the high-yield bond ETF (HYG) rising from 76.98 the previous day to 77.10, indicating a stabilization of credit spreads.
⭕️ Sharp rise in regional bank stocks and resilient performance of small-cap stocks
The sharp drop in long-term interest rates eased concerns over the expansion of unrealized losses on bond holdings and financing costs, leading the regional bank ETF (KRE) to record a significant gain of over 2.5%, rising from 70.62 the previous day to 72.41. Driven by expectations of reduced borrowing burdens, the small-cap Russell 2000 index also continued to rise, closing at 2,784.03, up 0.11%. In contrast to the sharp drop in large-cap tech stocks, capital inflows into domestic demand and financial-related stocks were notable. Buying on dips in sectors that directly benefit from lower interest rates played a role in preventing a total market collapse.
⭕️ Shift of funds to traditional blue-chip stocks keeps the Dow near recent highs
Capital fled from tech stocks into defensive value stocks such as industrials like Honeywell, financials, healthcare, and consumer staples, allowing the Dow to edge higher and close at 52,867.98. Selective buying continues for traditional companies that demonstrated stable cash flow and shareholder return policies in their July-September earnings. The Dow, which has a relatively lower weighting of technology stocks, demonstrated resilience by serving as a destination for sector rotation.
Future Outlook:
Following the market reaction to earnings from companies like Intel released after the close on October 22, next week (October 26–30) will mark the peak of the July-September earnings season, with reports from mega-cap technology companies such as Alphabet, Microsoft, Apple, and Amazon.com. As shown in today’s market, investors are strictly scrutinizing the actual contribution to cloud business growth rates and overall corporate profit margins rather than just the amount of capital expenditure on AI infrastructure. Whether next week’s mega-cap earnings can dispel market skepticism or further solidify the outflow of funds from tech stocks will be the ultimate litmus test.
Regarding economic indicators and monetary policy, the primary focus will be on the preliminary October US manufacturing and services PMI and the University of Michigan consumer sentiment index (final) to be released on October 23, as well as the FOMC meeting scheduled for October 27–28. With the US 10-year Treasury yield falling below the 5% mark to 4.953%, tension in the bond market has eased for now, but there is a risk that yields could be pushed back into the 5% range if PMI price indices or inflation expectations come in higher than expected. Sensitivity to economic data will increase further ahead of the weekend as investors look to gauge the assessment of inflation in the FOMC statement and Chair Warsh’s press conference.
In terms of geopolitics and the external environment, in addition to Middle East developments and energy price trends, the movement of the foreign exchange market, where the yen has rapidly strengthened against the dollar into the high 156 range, is being closely watched. If the correction of the dollar’s strength continues alongside the decline in US long-term interest rates, the currency headwind for the overseas earnings of US multinational corporations will ease, while it is also highly likely to spill over into overseas markets, including Japanese stocks, through changes in global capital flows. The three points to confirm are the earnings outlook for mega-cap tech companies next week, the results of the October PMI and inflation expectations, and the battle around the 5% level for the US 10-year Treasury yield.
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