Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S.

Selling pressure intensified in afternoon trading as investors took money off the table into month-end and ahead of next week's contentious midterm elections.

The tech-heavy Nasdaq lost 3.7% and was on track for its worst single-day performance since June. The index was also roughly 9% below its recent high. The blue-chip Dow was down 741 points, or 1.4%, while the S&P 500 slid 2.4%.

The Nasdaq Composite tumbled on Friday, while the Dow Jones Industrial Average outperformed as traders moved out of key stocks related to artificial intelligence and into more defensive areas of the market.

Amazon shares lost 2% after the company reported earnings and revenue for the third quarter that fell short of Wall Street's expectations. The company also posted negative free cash flow of $42.4 billion and maintained its 2026 capital expenditures forecast for $220 billion.

Intel , meanwhile, slide 29% after issuing a weak outlook for the current quarter, pointing to a slowdown in PCs. Revenue in the company's client computing and physical artificial intelligence group declined 5% from the year-ago quarter to $8.1 billion.

Sandisk was also down 12%, even as its fiscal first quarter results beat estimates. The data storage company announced an eight-for-one forward stock split.

Chipmakers more broadly were under pressure as well. Advanced Micro Devices dropped 11%, while others such as Nvidia and Broadcom fell 4% and 5%, respectively.

As investors rotated out of tech, defensive areas such as consumer staples and healthcare saw gains. Walmart and Coca-Cola each rose nearly 2%, while Procter & Gamble climbed more than 1%, supporting the Dow. Fellow Dow members Merck and Amgen added around 2%.

"The tone has changed a bit, and whether that changes the sustainability of the rotation is still yet to be determined," said Globalt's Keith Buchanan, who noted that this is a "scrutinizing" and "discerning" market. "Last year was hope. This year is: At the end of day, how does this all work in real world terms, like how to finance [it] and who gets the economics. Those questions are much more difficult to answer."

"There are real economy risks, and the market's picking up on that," the senior portfolio manager added.

Adding to the downbeat sentiment, The Financial Times reported, citing sources, that Blackstone told investors Anthropic may not receive an investment-grade rating after its debut. Anthropic's S-1 filing offered some momentum to the AI trade earlier this week, but pressure resumed as Wall Street digested more tech earnings.

On Thursday, Alphabet shares posted their worst day on record after the company missed on earnings and revenue in the third quarter and posted negative free cash flow of $9.07 billion. The Google-parent's slide dragged the Nasdaq to a more than 1% loss in the regular session.

Friday marks the final trading day in October. The month has been rocky for the AI trade, with investors paying close attention to companies' spending around the build-out. Hyperscalers Alphabet and Microsoft haven't lifted their capital expenditures forecasts.

At the same time, neoclouds — the cloud-computing companies that are behind the infrastructure needed for AI datacenters — are facing investor scrutiny over their debt levels. CoreWeave , which has seen a surge in its bond yields, is the poster child of that worry: Shares have cratered more than 37% in October. Nebius is heading for a 33% decline on the month.

The Roundhill Memory ETF (DRAM), which includes AI memory plays Micron and Seagate Technology, is off 20% in October, while the iShares A.I. Innovation and Tech Active ETF (BAI ) is down 17%.

As traders prepare to wrap up the month, the Nasdaq Composite is heading for a 5% fall. The S&P 500 is on track for a decline of less than 1%, while the Dow is on pace to rise 2%.