Fearing Stock Market Crash: Nasdaq Fell 5.5% on November 5
The Nasdaq dropped 5.5% on Thursday, November 5, and Nvidia fell more than 9% after Democrats won big in the US midterms. One UK investor says cash-rich FTSE 100 firms British American Tobacco and BAE Systems deserve a closer look.
The Nasdaq plunged 5.5% on Thursday, November 5, leaving investors fearing a stock market crash after a sell-off driven by worries over artificial intelligence (AI). Billions of dollars were wiped off the valuations of some of the world's biggest companies.
Nvidia, the AI chipmaker that has been a market favorite, fell more than 9%. The slide followed a sweeping Democratic victory in the US midterm elections, which stoked fears of an AI slowdown.
Some UK investors are now looking away from the technology trade. Ken Hall, a writer and investor who owns shares in Rolls-Royce, pointed on Monday to two FTSE 100 companies that generate large amounts of cash: British American Tobacco and BAE Systems.
Why cash flow matters in volatile markets
Hall argues that established businesses with strong cash flow can be valuable when markets swing. They can pay dividends and buy back shares, reinvest in growth without leaning on outside financing, and strengthen their balance sheets to weather downturns.
British American Tobacco
British American Tobacco (LSE: BATS) offers a dividend yield of 5.4%, according to Hall. In the first half of 2026, its free cash flow before dividends reached £2.3bn, up 85% year on year.
Management says it is committed to growing dividends and completing £1.3bn of share buybacks this year. Hall lists declining cigarette volumes, regulatory pressure and heavy debt as significant risks.
Group CEO Tadeu Marroco said: "We continue to make good progress towards our year-end target leverage range of 2.0–2.5x while rewarding shareholders through strong cash returns."
BAE Systems
BAE Systems (LSE: BA.) is the second name. Hall says rising government defence spending gives the aerospace and defence group room to grow.
Its latest half-year results showed £1.8bn in free cash flow and a record £84bn order backlog. Management also raised its 2026 free cash flow target to more than £2bn.
The shares stood at 1,846p on Monday morning, according to Hall. That puts the forward price-to-earnings ratio, which compares the share price with expected profits, at 22.
Hall calls that "not particularly cheap". He warns that cost overruns, contract delays or changes in government spending could hurt future returns. The stock has still climbed 223% over five years, and he says that, as a market leader in a growing industry, it warrants a closer look.
Hall says he prefers Rolls-Royce for its growth and diversification, though he sees BAE as a pure cash flow play. He does not invest in British American Tobacco for ethical reasons, and says each investor must weigh their own views.
