All three major Wall Street indexes fell after Meta and Microsoft shares fell on concerns about increased spending on artificial intelligence (AI).
Investors also weighed on a more hawkish tone from the Federal Reserve (Fed), which weighed on overall market sentiment.
Shares of Meta Platforms fell 11.3%, their biggest daily drop in three years, after the social media company forecasted an increase in capital spending next year due to continued investment in AI.
Microsoft shares fell 2.9% after the company reported a record $35 billion in capital spending for its fiscal first quarter and warned that spending is expected to continue to rise throughout the year.
In contrast, shares of Google parent company Alphabet rose 2.5% after steady growth in its advertising and cloud computing segments drove revenue above market expectations.
The market fall was also influenced by the Fed's statement at its monetary policy meeting early yesterday morning when Fed Chairman Jerome Powell stressed that a December interest rate cut was still far from certain.
The statement reduced market expectations for a rate cut to 70%, down from more than 90% at the start of the week.
The Dow Jones Industrial Average fell 0.23% to 47,522.12, the S&P 500 fell 0.99% to 6,822.34, while the tech-heavy Nasdaq plunged 1.57% to 23,581.14.
In other news, a widely anticipated trade deal between US President Donald Trump and Chinese President Xi Jinping did not appear to have much of an impact on the day's gains.
Trump also reportedly agreed to roll back some tariffs on China in exchange for Beijing's commitment to resume soybean purchases, ensure stable exports of rare earths, and crack down on fentanyl smuggling.
Meanwhile, shares of Chipotle Mexican Grill fell 18.2% after the burrito chain lowered its annual sales forecast as tariff and inflation pressures weighed on its profit margins.
Trading volume on US exchanges was worth $20.32 billion, compared to an average of $21.08 billion over a 20-day trading period.
