Meta's cash-raising spree signal triggers AI rotation trade: Nasdaq worst day since June, 10Y yield logs biggest one-day drop since March 2023

What happened

Signals from Meta Platforms that it could soon go on a cash-raising spree helped trigger another massive rotation trade on Thursday, with investors dumping stocks connected to the AI boom and piling into almost everything else, from U.S. Treasurys to beaten-down home builders and software companies, per the WSJ. Meta fell 7%, erasing $124 billion of market cap. The PHLX semiconductor index dropped 6.7%, SpaceX declined 9.1%, and Tesla fell 3.1% after its adjusted net income slid. The tech-heavy Nasdaq composite logged its worst day since June, tumbling 2.6%; the S&P 500 fell 1.2% while the Dow ticked up less than 0.1%. The bond rally sent the 10-year Treasury yield tumbling back below 5% — settling at 4.952% vs 5.145% Wednesday — its largest one-day drop since March 2023, when markets were gripped by the regional banking crisis.

Who’s affected

• META (-7%, $124B of market cap erased) — investors punished the signal that it may soon go on a cash-raising spree and raised the bar for returns on its AI spend
• AMZN, GOOGL (hyperscalers, down sharply) — facing the same debt-funded capex question ahead of their earnings next week
• NVDA and semiconductor complex (SOX -6.7%) — Lam Research's softer outlook added to supply-constraint timing worries; NVDA -4.4%, AMD -8.1%, Intel -8%, Micron -6.3%
• Vertiv and cooling/data-center equipment names — direct read-through from data-center capex financing fears
• SPCX (SpaceX) -9.1% — named in Meta's filing as a peer absorbing capital; merger speculation with Tesla offers no insulation
• TSLA -3.1% — mixed earnings and capex cut reinforced the capex-discipline-vs-AI-buildout tension
• Beneficiaries: U.S. Treasurys (10Y back below 5%), home builders, software, consumer staples (Clorox +4.6%), regional banks (M&T +1.5%) — the rotation recipients

Sources

wsj.combarchart.comtradingview.com