Even as the S&P 500 fell 1.24% to 7,661.33, more than 300 of its constituents rose, marking only the 13th session since 1990 that the index lost at least 1% on positive breadth and the second widest divergence since DeepSeek Monday in January 2025. The equal-weighted S&P 500 gained 0.7% as investors rotated into defensive stocks, lifting consumer staples 3.1% and utilities 2.03%.
Credit risk across the AI sector reached new highs alongside the equity rout, with 5 year credit default swaps on Microsoft and Broadcom hitting all-time peaks and SpaceX topping 200 basis points as it shops a $40 billion debt deal and Broadcom lines up $60 billion in chip financing for Anthropic. Meta shares fell 7%, erasing $124 billion in market value, and the spread on its 2036 bonds over Treasuries widened to 121 basis points while its 5 year CDS reached 119.3 basis points. The move followed Meta's third-quarter report showing $2.12 billion in negative free cash flow, its first cash burn in 13 years, alongside an increased 2026 capital expenditure forecast of $135 billion to $145 billion and $825 billion in future AI lease and contract commitments.