[Good Morning Stock Market] U.S. Stocks End Mixed as "AI Concerns Persist"; South Korean Stocks Likely to Pare Losses After Opening Lower

U.S. Stocks End Mixed as Meta's Cash Flow Deteriorates
South Korean Stocks Seen Opening Lower, Then Paring Losses

U.S. stocks ended mixed as concerns surrounding artificial intelligence (AI) persisted, including Meta's deteriorating cash flow and Tesla's lowered capital expenditure (CAPEX) guidance. South Korean stocks are also expected to open lower, but could pare their losses later if perceptions that the market is oversold take hold.

On Oct. 22, a display board in the dealing room at Hana Bank headquarters in Jung-gu, Seoul, showed the KOSPI and KOSDAQ indexes and the won-dollar exchange rate as the KOSPI opened lower a day after rebounding. The KOSPI opened at 5,670.11, down 65.55 points (1.14%) from the previous session, while the KOSDAQ opened at 789.84, down 2.92 points (0.37%), and both held near their opening levels. 2026.10.22 Photo by Cho Yongjun

On the 22nd (local time), the S&P 500 closed at 7,663.43 on the New York Stock Exchange (NYSE), down 93.74 points (1.21%) from the previous session. The Nasdaq Composite fell 694 points (2.60%) to 26,008.86, while the Dow Jones Industrial Average closed at 52,867.98, up 11.89 points (0.03%).

Meta's third-quarter revenue rose 26% year over year to $64.6 billion, exceeding Wall Street's estimate of $63.37 billion. However, its free cash flow turned negative, falling from $780 million in the previous quarter to -$2.12 billion this quarter, weighing on AI stocks across the board. This is seen as reflecting a market focus on profitability and financial issues, such as cash flow and investment capacity, rather than earnings, amid continuing concerns about AI-related credit risk stemming from CoreWeave.

"Recent concerns about AI financing appeared to be limited to neocloud companies with high reliance on borrowing, such as CoreWeave, but worries are growing that they could spread to big tech companies like Meta and other hyperscalers," said Han Ji-young, a researcher at Kiwoom Securities. "Meta's credit default swap (CDS) premium rose from 110 basis points (1 bp = 0.01 percentage points) to 117 basis points after its earnings announcement, marking a record high."

South Korean stocks are expected to open lower on the 23rd under the influence of U.S. markets, then pare their losses. "Some of the impact of Meta's earnings had already been priced into the domestic market the previous day. Given that the perception of overselling remains valid, the market is likely to absorb selling driven by panic at the open and recover some of its intraday losses," the researcher said.

Over the past three trading sessions, the KOSPI has swung between gains and losses of around 3%, making for a volatile market. However, given that the KOSPI has fallen 19.1% since the beginning of this month, a rebound remains possible amid perceptions that the decline has been excessive. It is also encouraging that earnings reported this week by big tech companies such as SpaceX and Meta have confirmed that underlying demand for AI remains strong.

"Therefore, at this point, I believe the best alternative is to remain on the sidelines while monitoring changes in the credit risks of AI companies and shifts in foreign investors' buying and selling activity, as the intensity of their selling has eased," the researcher said.

This content was produced with the assistance of AI translation services.