Nov 2, 2026 · 30 min

Tech rout tests AI optimism as defensive sectors surge

October was a great month for most stocks.

The episode frames Friday’s sell-off as a collision between geopolitical risk, doubts about AI spending, and a broader rotation away from crowded technology positions.

3 key takeaways

1Technology and semiconductor losses intensified as Iran headlines, oil prices, and AI-spending concerns unsettled risk assets.
2October’s gains were concentrated in energy, staples, health care, utilities, and materials rather than the market’s technology leaders.
3The week ahead brings consequential earnings, central-bank decisions, macroeconomic data, and uncertainty over U.S. midterm politics.

Don't miss

Hardy argues that October’s sector divergence points to position-squaring and stress in momentum and long-short strategies, not a uniform market meltdown.

The brief

John Hardy opens with Friday’s sharp risk-off session, where technology and semiconductor losses collided with oil volatility, Iran headlines, and a spike in the VIX.

The technology rout raises two competing explanations: geopolitical headline risk and growing doubts about AI spending, Google’s search business, and the durability of crowded trades.

Hardy surveys steep losses in Reddit, Intel, SanDisk, Datadog, and AMD before turning to earnings from Apple, Palantir, Vertex, AMD, and other major companies.

The episode’s broader market read is less apocalyptic: October rewarded energy, staples, health care, utilities, and materials, suggesting position-squaring rather than uniform capitulation.

The week ahead hinges on Iran diplomacy, U.S. midterm politics, central-bank guidance, macro data, and whether technology weakness spreads beyond momentum-heavy strategies.

What was said on this episode

28 statements · 6 positive · 21 negative · 1 neutral

John J. Hardyon SOX indexNegative2:38
The SOX semiconductor index fell 7.2% at Friday’s close.
“the SOX semiconductor index down 7.2% on the close”
Listen at 2:38
John J. Hardyon SOX indexNegative2:38
The SOX semiconductor index fell 7.2% at Friday’s close.
“the SOX semiconductor index down 7.2% on the close”
Listen at 2:38
John J. Hardyon Oil prices and Iran war concernsNegative2:58
Oil prices and Iran-war concerns drove much of Friday’s market decline.
“I think it's this oil price, the concerns around the Iran war that were driving a lot of this.”
Listen at 2:58
John J. Hardyon Credit spreadsNegative4:21
Credit spreads widened 27 basis points to 340 basis points Friday.
“credit spreads. They blew out 27 basis points actually on Friday to 340 basis points.”
Listen at 4:21
John J. Hardyon MAG-7Negative6:18
AI is eroding the Mag7 platform’s business position.
“here you are, Mag7 platform, which is being eroded by AI.”
Listen at 6:18
John J. Hardyon Google search businessNegative7:05
AI risks having a dramatic impact on Google’s search business.
“this would really risk a dramatic impact on their search business.”
Listen at 7:05
John J. Hardyon Google search businessNegative7:05
AI search could significantly damage Google’s search business.
“this would really risk a dramatic impact on their search business”
Listen at 7:05
John J. Hardyon Geopolitical headlines and insider tradingNegative8:04
Insiders may be manipulating geopolitical headlines for insider-trading profits.
“Maybe somebody on the inside would like to manipulate markets a little bit by pretending that they could do something hyperdramatic and circulated that around to make a little money on insider trading.”
Listen at 8:04
John J. Hardyon Reddit and IntelNegative9:31
Reddit and Intel suffered declines of 29% and 28% Friday.
“Reddit, minus 29%. Intel, minus 28%.”
Listen at 9:31
John J. Hardyon SOX indexNegative11:05
The SOX index appears to have closed below its 200-day moving average.
“It looks like it closed just below its 200-day moving average, the SOX index.”
Listen at 11:05
John J. Hardyon Nasdaq 100 and SOX index drawdownsNegative11:13
The Nasdaq 100 was down 9.5% and SOX was down 27% from recent highs.
“the NASDAQ 100 now has drawn down a total of a minus 9.5%. The SOX is down 27%.”
Listen at 11:13
John J. Hardyon SOX indexNegative11:19
The SOX index is 27% below its June peak.
“The SOX is down 27%.”
Listen at 11:19
John J. Hardyon S&P 500Negative11:45
The S&P 500 was down 3.3% from its recent high.
“The S&P 500 has only drawn down, as of Friday's close, 3.3%.”
Listen at 11:45
John J. Hardyon S&P 500Negative11:45
The S&P 500 had declined 3.3% from its recent level.
“The S&P 500 has only drawn down, as of Friday's close, 3.3%.”
Listen at 11:45
John J. Hardyon Senate DemocratsPositive14:31
Democrats have a strong chance of taking the Senate by at least one seat.
“there are quite solidly positive chances for the Democrats to take the Senate by at least that one seat”
Listen at 14:31
John J. Hardyon Reserve Bank of Australia rate hikesNegative16:10
The RBA’s rate hikes are excessive and harming Australia’s economy.
“I think they're getting a bit too far with their hiking and the Australian economy is starting to pay for it”
Listen at 16:10
John J. Hardyon Bank of EnglandPositive17:54
The Bank of England is expected to raise rates this week.
“they are expected to hike this week”
Listen at 17:54
John J. Hardyon ETFsPositive19:05
Nine tracked sectors posted positive returns in October.
“9 sectors had a positive October.”
Listen at 19:05
John J. Hardyon Sector ETF performance in OctoberPositive19:15
Most listed sectors posted substantial October gains, led by energy at 13.2%.
“Consumer staples up 11% in October. Consumer discretionary up 6% in October. Materials up 7.6%. Health up 10. Utilities up 10. Financials up six. Real estate up six. Energy up 13.2.”
Listen at 19:15
John J. Hardyon Consumer staplesPositive19:15
Consumer staples rose 11% in October.
“Consumer staples up 11% in October.”
Listen at 19:15
John J. Hardyon Energy sectorPositive19:29
The energy sector rose 13.2% in October.
“Energy up 13.2.”
Listen at 19:29
John J. Hardyon Technology sectorNegative19:34
The technology sector fell 8.3% in October.
“the tech sector minus 8.3%.”
Listen at 19:34
John J. Hardyon Communications services sectorNegative19:46
The communications-services sector fell 9.5% in October.
“Minus 9.5.”
Listen at 19:46
John J. Hardyon Long-short momentum strategiesNegative19:58
Long-short momentum strategies experienced a severe adverse month.
“it does feel like, though, that players that are having some kind of long-short combination playing momentum versus stuff they don't think is going to do well have just gotten administered a perfect storm over the last month.”
Listen at 19:58
John J. Hardyon AI-driven job lossesNegative22:11
Systematic AI-driven job losses should eventually appear in employment statistics.
“if we are starting to see job losses systematically because of AI, certainly it's got to show up at some point.”
Listen at 22:11
John J. Hardyon AI-driven job lossesNegative22:11
Systematic AI-driven job losses would eventually appear in employment statistics.
“if we are starting to see job losses systematically because of AI”
Listen at 22:11
John J. Hardyon AI-driven job lossesNegative23:22
John Hardy is not convinced current layoffs demonstrate an AI job apocalypse.
“I'm just not ready to go there yet”
Listen at 23:22
John J. Hardyon U.S. midterm elections and equity marketsNeutral27:22
Market outcomes are not strongly related to midterm elections.
“Whatever happens is not really related that much to the midterms.”
Listen at 27:22

Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.

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