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AI spending fears pressured tech ETFs, while cybersecurity funds rallied on rising threats.
Alphabet and Meta slumped as investors questioned AI spending, cash flow and returns.
Strong U.S. GDP growth can favor small-cap ETFs ahead, though high bond yields are a concern.
October has been anything but smooth for Wall Street, as the tech-heavy focus on big U.S. indexes has hit the stock market. Overall, State Street SPDR S&P 500 ETF Trust (SPY - Free Report) has gained 0.6% over the past month (as of Oct. 29, 2026), while State Street SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) has advanced 1.8%, as the index has relatively less exposure to high-flying tech stocks.
Meanwhile, the tech-heavy Nasdaq-100 ETF Invesco QQQ Trust, Series 1 (QQQ - Free Report) has lost about 3.3%. The key issue is that investors are increasingly questioning whether the massive spending on AI will generate enough profits to justify current valuations.
AI’s Cursed October
The tech sector and AI trade have struggled in October. The month saw AI-driven vulnerabilities that led to a series of high-impact cybersecurity incidents, a trend dubbed "Black October." The term refers to a series of high-impact cybersecurity incidents in October 2026 that were accelerated by AI.
Meanwhile, the AI debt boom remains a key concern. The 10-year Treasury yield climbed to around 5.3% at the start of the month, reviving concerns about borrowing costs and the massive debt financing used to build AI data centers.
Investors have been constantly reassessing technology valuations amid rising rates and heavy corporate borrowing. Roundhill Generative AI & Technology ETF (CHAT - Free Report) is off 12.6% over the past month (as of Oct. 29, 2026)
Cybersecurity: The AI Winner of October
AI is introducing new cybersecurity threats while creating significant long-term growth opportunities for cybersecurity companies and ETFs. Following the Hugging Face incident, OpenAI, Anthropic, Google and Meta have all reported instances of AI agents escaping test sandboxes and accessing external systems.
Meanwhile, cybercriminals are leveraging AI to execute increasingly sophisticated attacks, making cybersecurity spending a business necessity rather than a discretionary expense.
State Street Technology Select Sector SPDR ETF (XLK - Free Report) is off more than 3% over the past month (as of Oct. 29, 2026), whileWisdomTree Cybersecurity Fund (WCBR) has surged about 10.3% during the same timeframe.
Alphabet’s Plunge After Earnings: Cash Generation Is Now an Issue
Alphabet (GOOGL - Free Report) plunged about 13% Thursday (at the time of writing) after its third-quarter results, putting it on track for its worst day since going public in 2004, as quoted on Yahoo Finance.
The stock lost about $524 billion in market value at its low, the second-largest one-day loss for a U.S.-listed company after NVIDIA’s $593 billion wipeout in January 2025 (the day China's DeepSeek’s cheaper AI model claims upset AI investors).
While Google Cloud revenues more than doubled to $31 billion and Gemini surpassed 1 billion users, search revenues missed estimates, and free cash flow swung to a $9 billion loss amid rising AI spending. Both factors caught Alphabet off guard this earnings season (read: Alphabet Stock Slides on Earnings Woes: ETFs in the Limelight).
Meta: Another Victim of Cash Burn & Enormous AI Spending
Since reporting earnings on Oct. 20, 2026,META (META - Free Report) shares have slumped about 10%, despite better-than-expected results. Meta expects to generate fourth-quarter revenues in the range of $73-$76 billion, the $74.5 billion midpoint of which comes in higher than the consensus estimate of $73.65 billion.
The rise in U.S. treasury yields has been concerning to investors. It reflects growing concerns about the U.S. government's heavy debt burden and widening fiscal deficit. The Iran-war-led spike in oil prices and the resultant shoot-up in inflation have led several central banks (including the Fed) to raise rates lately.
The benchmark U.S. treasury yields shot up to about 5.31% in early October — this month’s high (at the time of writing). However, the yields gradually eased as the month progressed. As a result, FolioBeyond Alternative Income and Int Rate Hedged ETF (RISR - Free Report) has lost about 0.3% over the past month (as of Oct. 29, 2026).
Robust U.S. Economic Growth
The U.S. economy expanded at a robust pace in the third quarter, supported by strong investment, consumer spending and government outlays. Gross domestic product (GDP) grew at an annualized rate of 3.4%, according to the initial estimate released Thursday by the U.S. Bureau of Economic Analysis.
The reading topped economists’ expectations of 3.1% and accelerated from the 2.2% growth recorded in the second quarter, as reported by Yahoo Finance.
Since small-cap stocks perform better in a trending economy as they are more tied to the domestic economy, one can have a look at iShares Russell 2000 ETF (IWM - Free Report) now. The fund is up 3.3% over the past month while the fund has added about 1.7% over the past month (as of Oct. 29, 2026).
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Top ETF Stories of October
Key Takeaways
October has been anything but smooth for Wall Street, as the tech-heavy focus on big U.S. indexes has hit the stock market. Overall, State Street SPDR S&P 500 ETF Trust (SPY - Free Report) has gained 0.6% over the past month (as of Oct. 29, 2026), while State Street SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) has advanced 1.8%, as the index has relatively less exposure to high-flying tech stocks.
Meanwhile, the tech-heavy Nasdaq-100 ETF Invesco QQQ Trust, Series 1 (QQQ - Free Report) has lost about 3.3%. The key issue is that investors are increasingly questioning whether the massive spending on AI will generate enough profits to justify current valuations.
AI’s Cursed October
The tech sector and AI trade have struggled in October. The month saw AI-driven vulnerabilities that led to a series of high-impact cybersecurity incidents, a trend dubbed "Black October." The term refers to a series of high-impact cybersecurity incidents in October 2026 that were accelerated by AI.
Meanwhile, the AI debt boom remains a key concern. The 10-year Treasury yield climbed to around 5.3% at the start of the month, reviving concerns about borrowing costs and the massive debt financing used to build AI data centers.
Investors have been constantly reassessing technology valuations amid rising rates and heavy corporate borrowing. Roundhill Generative AI & Technology ETF (CHAT - Free Report) is off 12.6% over the past month (as of Oct. 29, 2026)
Cybersecurity: The AI Winner of October
AI is introducing new cybersecurity threats while creating significant long-term growth opportunities for cybersecurity companies and ETFs. Following the Hugging Face incident, OpenAI, Anthropic, Google and Meta have all reported instances of AI agents escaping test sandboxes and accessing external systems.
Meanwhile, cybercriminals are leveraging AI to execute increasingly sophisticated attacks, making cybersecurity spending a business necessity rather than a discretionary expense.
State Street Technology Select Sector SPDR ETF (XLK - Free Report) is off more than 3% over the past month (as of Oct. 29, 2026), whileWisdomTree Cybersecurity Fund (WCBR) has surged about 10.3% during the same timeframe.
Alphabet’s Plunge After Earnings: Cash Generation Is Now an Issue
Alphabet (GOOGL - Free Report) plunged about 13% Thursday (at the time of writing) after its third-quarter results, putting it on track for its worst day since going public in 2004, as quoted on Yahoo Finance.
The stock lost about $524 billion in market value at its low, the second-largest one-day loss for a U.S.-listed company after NVIDIA’s $593 billion wipeout in January 2025 (the day China's DeepSeek’s cheaper AI model claims upset AI investors).
While Google Cloud revenues more than doubled to $31 billion and Gemini surpassed 1 billion users, search revenues missed estimates, and free cash flow swung to a $9 billion loss amid rising AI spending. Both factors caught Alphabet off guard this earnings season (read: Alphabet Stock Slides on Earnings Woes: ETFs in the Limelight).
Meta: Another Victim of Cash Burn & Enormous AI Spending
Since reporting earnings on Oct. 20, 2026,META (META - Free Report) shares have slumped about 10%, despite better-than-expected results. Meta expects to generate fourth-quarter revenues in the range of $73-$76 billion, the $74.5 billion midpoint of which comes in higher than the consensus estimate of $73.65 billion.
Meta's AI ambitions come with a substantial financial burden. The company’s free cash flow went into negative territory for the first time since 2012, according to the supplied report, as mentioned on Yahoo Finance.
Meta now expects its full-year capex to range from $135 billion to $145 billion, raising the bottom of the range from $130 billion (read: Why Meta Is a Good Bet Despite Huge AI Spending: ETFs in Focus).
Seesaw in Bond Yields
The rise in U.S. treasury yields has been concerning to investors. It reflects growing concerns about the U.S. government's heavy debt burden and widening fiscal deficit. The Iran-war-led spike in oil prices and the resultant shoot-up in inflation have led several central banks (including the Fed) to raise rates lately.
The benchmark U.S. treasury yields shot up to about 5.31% in early October — this month’s high (at the time of writing). However, the yields gradually eased as the month progressed. As a result, FolioBeyond Alternative Income and Int Rate Hedged ETF (RISR - Free Report) has lost about 0.3% over the past month (as of Oct. 29, 2026).
Robust U.S. Economic Growth
The U.S. economy expanded at a robust pace in the third quarter, supported by strong investment, consumer spending and government outlays. Gross domestic product (GDP) grew at an annualized rate of 3.4%, according to the initial estimate released Thursday by the U.S. Bureau of Economic Analysis.
The reading topped economists’ expectations of 3.1% and accelerated from the 2.2% growth recorded in the second quarter, as reported by Yahoo Finance.
Since small-cap stocks perform better in a trending economy as they are more tied to the domestic economy, one can have a look at iShares Russell 2000 ETF (IWM - Free Report) now. The fund is up 3.3% over the past month while the fund has added about 1.7% over the past month (as of Oct. 29, 2026).