Finance Evening: AI Spending Fears Trigger Tech Rout, Nasdaq Falls 2.86%; Canada’s Economy Stalls in August

📊 Today’s North American Markets

1. AI spending fears slam Wall Street as October ends with a brutal selloff

US stocks plunged on the final trading day of October as earnings from Amazon and Alphabet rekindled concerns about how much Big Tech is spending on artificial intelligence. The Nasdaq Composite tumbled 2.86%, the S&P 500 fell 1.82% and the Dow Jones Industrial Average dropped 1.09%. It was the Nasdaq’s worst day since June 5, and the index lost about 5% in October — its worst month since March 2025.

Amazon fell 2%, while Alphabet kept erasing market value after its worst single-day performance in more than 20 years a day earlier. Intel dropped as much as 29% in premarket trading after its fourth-quarter outlook came up short. A rebound in oil added pressure, with Brent crude futures reaching US$112 a barrel and WTI touching US$104.

Truist chief investment officer Keith Lerner attributed the pullback to high expectations for tech earnings, investors becoming more discerning about AI returns and rising borrowing costs. He sees roughly 2% to 8% more downside for tech from current levels, but said “the corrective process may not be complete, yet the weight of the evidence suggests the longer-term tech uptrend remains intact.”

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2. Reddit plunges 29% in its worst day since going public

Reddit shares cratered 29.22% on Friday, the worst drop since the company went public in 2024 and worse than its previous record of 20.99% on July 31. The company on Thursday projected fourth-quarter sales of US$1 billion to US$1.03 billion, below analysts’ estimate of US$1.05 billion. Third-quarter sales grew 53% year over year, slower than in prior quarters, though earnings and revenue both beat Wall Street expectations.

In an interview with CNBC, CEO Steve Huffman said search-referral traffic from Google went “down meaningfully in this quarter” because of Google’s AI Overview feature. Reddit said Thursday it will test requiring users to log in to access content — a major change for a site built on open discussion. Huffman called it “a sign of the times” and “an evolution of how these platforms work.”

Several analysts downgraded the stock after the results. Citizens noted that “search changes highlight the problem with selling content to Google,” adding that as referral problems worsen, uncertainty about user growth under the login requirement “puts more pressure on user monetization.”

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3. Binance loses US$6.3-billion in what may be the largest heist ever

Hackers stole US$6.3-billion from Binance, the world’s biggest cryptocurrency exchange, in a theft analysts blamed on North Korea and said could be the largest financial heist of all time. Crypto prices fell on the news. Binance halted withdrawals and said it would use company funds to cover the losses, while stablecoin issuers including Tether and World Liberty Financial froze about half of the stolen assets.

Binance said it had set aside about US$6.34-billion of company funds to cover the losses, that roughly US$3-billion had been located so far, and that it expected to resume withdrawals within 48 hours. According to blockchain analysis firms TRM Labs and Chainalysis, the bulk of the heist unfolded in about 20 minutes on Thursday and mirrored a 2025 attack on Bybit that the FBI attributed to North Korea. Bitcoin hit a six-week low of US$76,368, ether fell more than 3% to US$2,178 and BNB dropped 5.3% to US$699.54 over 24 hours.

Binance said it is working with the FBI and the US Secret Service. An initial investigation suggested the breach may have started with a hacked laptop belonging to one of its engineers, which let an attacker access a company system and make unauthorized withdrawals. “Your money is safe and we’re covering every loss,” co-CEO Richard Teng said on X.

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4. Canada’s economy flatlines for a second straight month in August

Canada’s real gross domestic product was unchanged month over month in August, the second straight month without growth after a 0.4% gain in June, Statistics Canada said Friday. Economists had expected 0.2% growth, and the agency’s flash estimate suggests the economy shrank 0.1% in September. Growth is tracking 1.3% annualized for the third quarter, below the Bank of Canada’s 2% forecast in its October Monetary Policy Report.

Wholesale trade was the biggest detractor, falling 1.4%, mainly on lower sales of motor vehicles and parts as imports of passenger cars and light trucks declined. Retail trade rose 1.2%, with manufacturing, rail transportation and finance and insurance also posting gains.

Ali Jaffery, partner and chief economist at KPMG Canada, called the data “very noisy” and said the economy “looks like it has lost some momentum in August and September,” consistent with labour market figures, but remains “a very uneven economy.” KPMG expects 1.5% annualized growth in the third quarter and 1.4% in the fourth, and forecasts another Bank of Canada hike in December and again in early 2027.

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5. After a surprise August stall, economists debate the next rate hike

Statistics Canada said Friday that real GDP was essentially unchanged for a second straight month in August, falling short of the 0.2% gain economists and the agency itself had expected — leaving economists to debate the timing of the Bank of Canada’s next move. Wholesale trade fell 1.4%, and motor vehicle and parts manufacturing dropped 5.8%, which the agency attributed to a “prolonged summer shutdown at a major auto assembly plant.”

The agency’s early estimate for September points to a 0.1% decline, with third-quarter growth tracking 1.3% annualized, down from 3.3% in the second quarter. The data landed two days after the Bank of Canada raised its benchmark rate a quarter point to 2.5%, its first hike in more than three years. Governor Tiff Macklem cited resilience in the economy over the spring in justifying the decision.

BMO chief economist Doug Porter wrote that some of last quarter’s weakness may be overstated, but “with the trade tiff still flaring, housing struggling, and recent employment figures concerning, it certainly appears that growth has run into some pretty serious headwinds.” BMO trimmed its third-quarter call to 1.5% from 2%. CIBC senior economist Andrew Grantham said the weak data support a pause at the central bank’s final decision of the year in December. Market odds of a Dec. 9 hike stood at 57% Friday morning, according to LSEG Data & Analytics.

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6. Soaring jet fuel costs have added billions for WestJet and Air Canada

Canada’s two major airlines have revealed the toll of soaring jet fuel prices this year: WestJet has paid C$1-billion in added costs, while Air Canada said its fuel bill rose by C$1.5-billion in the first nine months of 2026. WestJet CEO Alexis von Hoensbroech said the Calgary-based carrier’s 2026 fuel costs are expected to double from last year to C$3.2-billion, sending it to a loss this year. “Right now we are literally paying double what we paid a year ago,” he said.

Montreal-based Air Canada said in Thursday’s third-quarter results that fuel expenses were C$2.1-billion, up C$906-million from a year earlier, with the nine-month bill above C$5-billion. Profit for the quarter ended Sept. 30 fell to C$139-million from C$264-million a year ago, even as revenue rose 21% to C$7-billion.

Jet fuel prices soared after the US and Israel went to war with Iran in late February, cutting off the Strait of Hormuz and damaging refineries. US Gulf Coast jet fuel sold for US$4.44 a gallon on Tuesday versus US$2.50 before the war. Air Canada now expects to pay US$4.60 a gallon in the fourth quarter, up from its US$3.50 outlook in August.

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7. Bank of Japan holds rates, says underlying inflation is consistent with 2%

The Bank of Japan held its policy rate at 1.25% on Friday, still its highest since 1995, in an 8-1 vote with board member Hajime Takata dissenting in favour of a hike to 1.5%. The central bank also said underlying inflation is “generally consistent” with its 2% target — the first time it has made that assessment since adopting the target in 2013, having previously said inflation was “approaching 2 percent.”

The BOJ raised its inflation forecast for fiscal 2027 to 2.6% from 2.4%, and its “core-core” forecast — which strips out fresh food and energy — to 2.7% from 2.6%. It flagged the risk that underlying inflation deviates upward beyond 2%, saying “firms’ behavior has been shifting more toward raising wages and prices and there are various factors that could drive up prices.”

Krishna Bhimavarapu, APAC economist at State Street Investment Management, described the decision as a “hawkish hold,” saying the BOJ sees more hikes ahead and is gaining confidence in a self-sustaining wage-price cycle. Japan’s September core inflation hit 2.1%, its highest reading of 2026, while inflation-adjusted wages rose 1.5% year over year in August, the eighth straight monthly increase.

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8. ECB President Christine Lagarde resigns as volatility mounts

European Central Bank President Christine Lagarde announced her resignation on Thursday and will step down on February 7, ending months of speculation about her future. Her term had been scheduled to run until the end of October 2027. European Council President Antonio Costa said the process to find a successor would begin immediately, with former Dutch and Spanish central bank governors Klaas Knot and Pablo Hernandez de Cos widely seen as frontrunners.

“I leave this institution with a sense of good work done and an ECB that is fit for the future,” Lagarde said in a short video on social media. A source with direct knowledge of the matter said she resigned so she could weigh in on political matters in her native France and globally; as ECB president she was expected to remain neutral to safeguard the institution’s independence.

The move comes as the ECB battles inflation risks from an Iran-driven oil shock while a sharp rise in bond yields, especially in France, threatens growth. The ECB is widely expected to keep its deposit rate at 2.5% on Thursday while signalling that another increase, potentially as soon as December, remains likely.

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9. Gold plunges below US$3,900 to a one-year low

Gold broke convincingly below US$4,000 an ounce on Friday and fell to its lowest level in more than a year. Spot gold last traded at about US$3,880 an ounce, down 3.5% on the day, with an intraday low last seen on October 6, 2025. Prices are down nearly 3% on the week. Silver fell even harder: spot silver traded at US$48.95 an ounce, down nearly 6% on the day, below the US$50 mark and down nearly 9% on the week — its worst weekly decline since early June.

Philip Streible, chief market strategist at Blue Line Futures, said gold will keep struggling while the war with Iran keeps oil elevated. “The rule in the markets is that you are supposed to buy the inflation, and oil right now is the inflation,” he said, noting that 3.4% growth in the third quarter gives the Federal Reserve room to keep raising rates.

Analysts also pointed to margin calls during the tech selloff, with investors selling gold — a liquid asset — to raise cash. Gold now trades roughly 13.5% below its 200-day moving average near US$4,490 an ounce.

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10. CPPIB survey: Canadians underestimate how long retirement will last

A 2026 retirement survey by the Canada Pension Plan Investment Board, which polled about 5,000 people, found that a strong majority understand people are living longer, but only 34% have accounted for that in their retirement planning. Three-quarters of Canadians have set aside money for retirement, yet only 42% have a financial plan and 34% are saving without one. Four in 10 said they have never discussed how many years of retirement they need to plan for.

Michel Leduc, CPPIB’s senior managing director and chief public affairs officer, described “a significant disconnect between the retirement people expect and the retirement they believe they are financially prepared to support” — a “gap between awareness and action.” Among non-retirees, 45% struggle to estimate how long they will be retired; those who venture a guess put the median at 20 years, but believe their finances will cover only half of it. Only 15% of people still working think they have enough money to fully fund retirement, while 59% are unsure.

Sixty-one per cent fear outliving their savings, and 45% say they won’t have enough if they live to 100. Almost 35% are very or extremely stressed about day-to-day money issues, up from 31% a year earlier, and 47% of those earning under C$50,000 report similar anxiety. Canada had 10,105 centenarians as of July, up from 7,237 in 2016, while the share of the population aged 65 and over rose to 20% from about 16%.

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