Wall Street tumbles as AI debt fears and oil prices spike trigger broad market selloff
Technology stocks lead declines
Wall Street tumbled on Friday as technology stocks led a broad market selloff, with CoreWeave and other AI infrastructure firms under renewed pressure over debt concerns. CoreWeave, a cloud-computing services provider whose bonds recently hit levels that typically signal distress, sank 14 per cent. The Nasdaq 100 fell 2.5 per cent. CoreWeave slumped 12%, bringing its loss over the past five sessions to about 25%. The data center operator’s bonds also sold off sharply this week, pushing yields above 15%. Broadcom fell 3.6%, and the PHLX chip index sank 2.5%, on track for its eighth straight day of declines. Shares of CoreWeave slid nearly 12% on Friday and dropped roughly 24% this week. Micron Technology fell 5.6%, Advanced Micro Devices dropped 6%, Broadcom was down 4.5% and Intel lost 5.8%.
Oil prices jump on supply worries
Investors on Friday were also watching oil prices jump more than 3% due to Middle East supply worries. The S&P 500 was down 1.22% at 7,649.71 points. The Nasdaq declined 2.19% to 26,128.13 points, while the Dow Jones Industrial Average was down 0.55% at 51,891.77 points. Six of the 11 S&P 500 sector indexes declined, led lower by communication services, down 2.52%, followed by a 2.38% loss in information technology.
Sector rotation evident
The Nasdaq was on track for a loss of over 4% for the week, hammered by concerns that debt-laden AI infrastructure companies may not turn profits in time to repay debts, particularly with borrowing costs expected to rise. The S&P 500 was set for its steepest weekly loss since January, and the Nasdaq was heading for its sharpest weekly fall since June. Declining stocks outnumbered rising ones within the S&P 500 by a 1.3-to-one ratio. The S&P 500 posted 19 new highs and one new low; the Nasdaq recorded 49 new highs and 263 new lows.
Inflation data fuels Fed speculation
Hotter-than-expected consumer and producer inflation reports this week showed price pressures were extending beyond energy commodities. Yields on the 10-year U.S. Treasury bonds — a key benchmark for mortgages, credit cards and other loans — held steady at 5.1% on Friday. The hot inflation readings this week could spur the Federal Reserve to raise interest rates at its next meeting on Oct. 28-29, according to some economists. For now, most Wall Street traders expect the central bank to keep its short-term rate unchanged, but the odds of a rate hike at the Fed’s December meeting have jumped to 74.3% from 50.2% a month ago, according to CME FedWatch, which tracks Fed funds futures prices. Third-quarter earnings season shifts into gear next week with reports from Tesla, Meta Platforms and Procter & Gamble. Analysts on average see quarterly earnings surging over 30%, driven by AI-related megacaps, according to LSEG data. While the S&P 500 remains up about 12% in 2025, most of that gain has come from AI-related tech stocks, and the index’s median component has climbed only about 6%, year to date. About 185 S&P 500 stocks have lost ground in 2025. Tesla dropped 2.5% after the electric-vehicle maker unveiled a redesigned Roadster, powered by rocket-style thrusters, developed in collaboration with SpaceX. Netflix appointed former Disney executive Peter Rice as chief content officer on Thursday. Its shares were down 2.9%.
Sources
- Wall Street tumbles as worries about AI and high oil prices weigh
- US STOCKS-Wall Street tumbles as worries about AI trade and high oil prices weigh
- Tech stocks tumble as AI debt fears rattle Wall Street
Photo: Wikideas1 (CC0)
