Nasdaq-100 Enters Correction as Megacap Results Stoke AI Spending Fears

The Nasdaq-100 fell on Monday, November 2, and Bloomberg reported that the index had entered a correction, its third of 2026. Bloomberg attributed the slide to megacap results, the quarterly reports from the largest technology companies, which amplified fears about artificial intelligence (AI) spending. Traders who had bought a leveraged exchange-traded fund (ETF), a fund designed to move by a multiple of an index's daily return, to bet on a rebound in technology stocks lost money on the move, according to MarketWatch.

A correction is conventionally a decline of 10% or more from a recent peak. Bloomberg said the index had entered correction and remained up 11% for 2026 despite the drawdown, meaning the fall from its high point. Yahoo Finance reported on November 1 that the Nasdaq-100 briefly fell into correction during a session but closed 9.1% below its record. The distinction matters for anyone reading the headline literally. A close is what settles portfolios and margin accounts (accounts where a broker lends money against securities). Nasdaq's methodology notes that the closing value of the index may change until 17:15 ET, as corrections are made to the last sale prices of its constituents, the individual stocks it holds. An intraday breach can therefore look different from the number that ends up on a statement.

The leveraged product is where the damage concentrates. These funds reset daily, targeting a multiple of each day's index return. Over a period longer than one day, the cumulative result can diverge from the multiple of the index's move, and that divergence tends to widen in choppy, falling markets. A holder betting on a rebound who buys into a falling tape therefore faces two problems at once: being wrong on direction in the short run, and a path that compounds the loss relative to the index itself.

The late-October selloff set up the move. On October 30, Reuters reported that Wall Street closed sharply lower on fears about AI cash burn sparking a tech selloff. The Dow fell 1.09%, the S&P 500 fell 1.82%, and the Nasdaq fell 2.86%. In its October 30 coverage, MarketWatch reported that the Nasdaq logged its worst month since March 2025, as heavy AI spending and weak tech earnings rattled Wall Street, and that the Nasdaq-100 was approaching correction territory. Yahoo Finance's video coverage described investors dumping tech stocks on disappointing earnings ahead of the correction call.

The pattern of AI-related worry is older than this month. In mid-October, Nasdaq-100 futures, contracts that track where the index is expected to open, fell 1.3% to 29,784 on concerns about the financial health of CoreWeave, a leading AI cloud provider. That move pointed to a question broader than any single company's quarterly print: whether the capital spent building AI infrastructure turns into cash flow quickly enough to satisfy investors. The late-October earnings reports put that question back at the center of the tape.

The index's recent history gives the drawdown some context. Nasdaq's September 2026 review reported that the Nasdaq-100 gained 3.3%, led by larger-cap growth members in technology and communications. Its July review had recorded a 6.6% decline for the index. Looking further back, Nasdaq's 2025 review reported the Nasdaq-100 advanced 21.0% over that year. Nasdaq's June review, citing FactSet, reported that second-quarter earnings growth expectations had risen from 18.8% at the end of the first quarter to 23.1%.

The broader context here is that rising expectations raise the bar for results. When results disappoint, the reaction in richly valued megacaps can be sharp.

For ordinary savers, the numbers sit side by side and point in different directions. An index still up 11% on the year can be 9.1% below its record at the close, and a leveraged fund amplifies whichever direction the market takes over the holding period. Neither figure says where the index goes next. 2026 has now produced three corrections in the Nasdaq-100, and the latest one arrived after a period of strong gains and high earnings expectations. Whether the current decline marks a turn or a pause is a question the market has not answered.