Spooked investors sink Big Tech stocks

Host Kai Rizdal begins with the Federal Reserve’s Wednesday press conference, which he and Bloomberg’s Kate Davidson characterize as unusually uneventful. The most concrete announcement was about the Fed’s future calendar: it will keep the same number of meetings next year but make one fewer rate decision, with the possibility of two fewer decisions the following year. The chair said the extra time would allow officials to discuss broad policy strategy and receive more economic data between meetings. Markets did not welcome the idea. Wall Street Journal reporter Greg Ip says the plan reflects the chair’s belief that the Fed should be in the news less, but fewer meetings do not make the economy less volatile. New data could arrive while markets wait longer for an official response. After the Fed’s blackout period ended, the Dallas, St. Louis and Richmond Fed presidents offered fairly strong guidance: rates may need to rise again because current rates are not yet restraining the economy enough to cool inflation. Dallas Fed President Lorie Logan said she expects at least two more increases. Davidson also says officials are rejecting the idea that rising market yields can do all the Fed’s work; financial conditions remain a “tailwind,” not a restraint, for economic activity.

The conversation turns to the latest economic data. Ip says the economy grew at a 3.4% annual rate in the quarter, its best performance in a year. Measures of underlying demand were growing at roughly 5%, the strongest pace in three or four years, indicating that the economy is not merely strong but accelerating. Inflation, measured by personal consumption expenditures, was still running at 3.6%. Ip’s main concern is the gap between overall growth and the money reaching households. Real disposable income—the income ordinary people have left after taxes and adjusted for inflation—was growing at only about 1.5%, roughly half the pace of the economy. He attributes much of the growth to investment, artificial intelligence and corporate profits rather than gains “trickling down” to workers. That mismatch, he argues, helps explain why people remain unhappy with the economy even while headline economic statistics look strong.

The week’s market sell-off focused especially on technology companies. Intel fell 28.58% on Friday, while Meta, Microsoft, Nvidia, AMD and other major technology stocks also declined. Marketplace reporter Kaley Wells speaks with Daniel Newman of the Futurum Group, who says the mood changed abruptly: investors were smiling Monday and Tuesday but “everybody was crying” by the end of the week. He says the companies’ AI investments were not themselves the immediate problem; their cloud businesses were performing well, but weaknesses appeared elsewhere. Google’s advertising revenue was slowing, Amazon’s e-commerce business still did not stand on its own, Microsoft was selling bonds to fund spending, and Intel was not selling enough PC components. Babson College professor Peter Cohen says companies have been using legacy businesses to finance AI investment while promising a large future payoff. Investors are increasingly uneasy that capital expenditures are rising without a clear return. The situation recalls the dot-com bubble in its pattern of heavy investment and unmet expectations, although Wedbush analyst Matt Bryson says the comparison has limits: unlike the dot-com period, demand for technology has not softened, and customers continue to spend more on AI. The current problem is that companies keep expanding supply and telling investors they will spend even more, while investors are becoming less willing to accept enormous valuations without evidence of future profits.

In the “Clocked Out” series, MJ Andrews describes changing careers at age 51. After a divorce and ten years as a stay-at-home mother, she found work at a mom-and-pop sports bar outside Pittsburgh. She bartended for 20 years, enjoyed the job and earned enough to pay the bills. During the COVID lockdown, however, she watched her mother, who was a nurse practitioner, and other family members in nursing deal with the pandemic. That experience made her want to help people and convinced her that nursing might suit her because she had grown up around nurses. Andrews initially planned to work while attending nursing school and managed it for the first semester, but the workload was much heavier than she expected. She then told the bar she had to stop working, relying on her family and partner for financial support. Her partner had encouraged her to return to school and offered to pay the bills. Andrews says she could not have completed the program without her family’s help. The segment invites listeners who left the labor force because of burnout, education or another major change to share their own stories.

Marketplace examines why firms sometimes offer voluntary buyouts instead of imposing traditional layoffs. Nita Chinzer, now a professor at the University of Guelph, recalls working for a telecommunications company during the late-1990s dot-com bubble, when the company went through repeated rounds of voluntary layoffs. She repeatedly volunteered because she wanted to return to school, but was not selected until she was one of only four employees remaining in a space that had held 160 people. She says voluntary cuts can feel less damaging because employees opt in rather than being singled out by management. University of South Carolina professor Anthony Nyberg notes the tradeoff: companies surrender control over who leaves. Employees who are confident they can find another job may be the most likely to accept, meaning top talent can depart—especially if they expect more cuts. Investors often prefer forced layoffs because the savings are more immediate and measurable, but Nyberg says ordinary layoffs can produce additional, unintended turnover among high performers. Chinzer says buyouts have become more common in recent years, suggesting that companies are forecasting six months or a year ahead and trying to prepare for economic trouble or planned investments.

Washington Post columnist Michael Coren went to Mexico City to test-drive Chinese electric vehicles that are largely unavailable in the United States. He chose Mexico because Chinese brands have entered that market rapidly, making it a useful comparison between Chinese and American automakers. On Mexican streets, he saw five, ten or fifteen Chinese vehicles within minutes. Chinese brands now account for about 15% of all cars sold in Mexico and roughly 90% of the country’s EV market. Coren says Chinese manufacturers offer vehicles at almost every price point, beginning around $20,000, with features and quality he described as “affordable luxury.” Even the least expensive models provided value he did not see in cars costing a third more or twice as much. He argues that American automakers made the right strategic bet that transportation would electrify, but pulled back after U.S. incentives and policy support disappeared, writing off more than $50 billion in investments. The result is a split market: much of the world is electrifying quickly while the United States remains one of the few countries where EV market share reached roughly 6% to 10% and then declined. Coren says Chinese EVs may be kept out by tariffs, national-security concerns and proposed restrictions on partnerships, even though Chinese manufacturers can develop a car in 18 months compared with three to five years or more for many U.S. brands.

In the closing market report, the Dow fell 572 points, or 1.1%, the Nasdaq dropped 747 points, or 2.9%, and the S&P 500 lost nearly 140 points, or 1.8%. For the week, the Dow declined 0.9%, the Nasdaq fell 2%, and the S&P 500 slipped 0.6%. Microsoft and Meta each lost about 1.5%, while Amazon and Alphabet declined roughly 1% to 1.4%. Hershey’s shares fell 3.3% after its CEO said the company needed consumers to “show up” for last-minute Halloween spending. Bond prices rose, bringing the 10-year Treasury yield down to 4.93%. The program ends with Starbucks, which reported U.S. same-store sales growth of 7% but is developing an AI feature intended to recognize customers when they arrive and offer personalized digital menus. Rizdal reacts skeptically: “I don’t know.” He then says goodbye to John Gordon, a longtime Marketplace editor and producer who is leaving the parent company after nearly 40 years and Marketplace after more than a decade. The broadcast closes with a promotion for Marketplace’s children’s program Million Bazillion, which has an episode explaining recessions and depressions through the fictional “recession crushers.”

The Fed’s proposed reduction in rate decisions is intended to create more time for strategic discussion and additional economic data, but it could also make the central bank slower to respond when the economy changes quickly. Fed officials still believe inflation is too high and current interest rates are not restrictive enough; Dallas Fed President Lorie Logan indicated that at least two further rate increases may be needed. The economy grew at a 3.4% annual rate and underlying demand was growing around 5%, but real disposable income rose only about 1.5%, helping explain why many households do not feel as prosperous as the headline data suggest. Investors are increasingly demanding proof that massive AI capital expenditures will generate future revenue and profit, even though demand for AI-related technology remains strong. Voluntary buyouts can make job cuts less adversarial and help companies plan ahead, but they may attract employees who are most capable of finding another job, including top performers. Chinese EVs have captured about 90% of Mexico’s electric-vehicle market by combining low prices with features and quality that Coren described as affordable luxury. U.S. automakers face a strategic dilemma: the global market is electrifying rapidly, while U.S. EV adoption has lagged and even declined after policy incentives were reduced.