The relentless sell-off in equity indices shows that neither falling Treasury yields nor an oil collapse are cures for fading investor appetite for AI. The Nasdaq 100 has entered a correction amid gloomy commentary from Apple and worries that data-center builds could be scaled back after the US midterms.

Daily Nasdaq 100 performance

You might have expected the fall in Brent, driven by reports of US-Iran diplomacy, to act as a lifeline for the S&P 500 and the Nasdaq 100. Treasuries also reacted with lower yields. Instead, equities ignored that relief; selling in oil and gas names actually amplified the weakness.

In October, the equal-weighted S&P 500 outperformed the cap-weighted index at the fastest pace since 2009. Consumer staples, energy, health care, and utilities rose by about 8%, while information technology and communication services fell by roughly 9%.

Equal-weight vs. cap-weight S&P 500 dynamics

Those divergences highlight the outsized role of mega-caps, primarily tech names, in today's market. So it was hardly surprising that trouble at Alphabet hammered the S&P 500; now Apple is in the spotlight.

Apple's report looked fine on the surface. Q3 revenue rose by 12%, gross margin was 47.9%, and net income totaled $30.71 billion — all beating Wall Street consensus. Yet management warned that share-service revenue growth and gross margins will slow, and the stock fell, dragging the S&P 500 and the Nasdaq 100 lower in its wake.

Investors worry about midterms, but the key question for markets is not simply which party controls Congress. More acute is the risk at the state level: for example, Texas plans to bring online about a quarter of US data-center capacity by 2030. If new governors freeze projects, the blow to AI-related firms would be acute.

So despite Barclays' view that the last three midterms didn't trouble stocks or bonds, indices remain under pressure. Wolfe Research warns that traders who expect to buy the dips after the midterms may be disappointed. The wall of AI-related worry will likely keep equities from mounting a sustained advance.

Technically, the S&P 500 failed to break above the earlier resistance near 7,645 on the daily chart. That retreat allowed short positions to ramp up.