Nasdaq posts worst week since June as AI-trade selloff spreads and oil climbs

The Nasdaq composite had its worst week since June, falling 4.5% over five sessions as selling in artificial-intelligence and chip stocks deepened, according to Associated Press closing figures.

On Friday, Oct. 16, the Nasdaq fell 572.99 points, or 2.1%, to 26,140.03. The S&P 500 lost 84.62 points, or 1.1%, to 7,659.44 and also posted its worst week since June, down 1.9%. The Dow Jones Industrial Average slipped 175.28 points, or 0.3%, to 52,002.41, but still finished the week up 0.7%.

The Russell 2000 index of smaller companies fell 1.7% on the day and 3% on the week.

What drove it

Chip companies kept falling as worries grew about how long spending on the AI buildout will last, the AP reported. Micron Technology fell 5.6% and Intel lost 5.8%.

CoreWeave, the Nvidia-backed AI cloud company, closed down 12%, its second big drop in three days amid concerns about its debt, according to a market wrap published on Yahoo Finance. Reuters said CoreWeave had lost about 25% over five sessions and its bonds had sold off sharply. The iShares Semiconductor ETF fell 4% on Friday after dropping 8% over the first four days of the week.

Reuters said worries about the AI trade and high oil prices weighed on Wall Street, with oil jumping on Middle East supply worries. U.S. crude rose 3.4% to $101.35 a barrel and Brent rose 3.5% to $109.55 around 4 p.m. ET, according to the same wrap.

Rates and the Fed

Inflation readings this week came in hotter than expected. The 10-year Treasury yield was above 5.09% late Friday, after briefly reaching 5.33% following Wednesday's consumer price report.

Traders saw a 17% chance of a Fed rate hike at its late-October meeting and an 89% chance in December, according to CME FedWatch data cited in the wrap.

"Black Monday 2.0"?

Monday, Oct. 19, is the anniversary of the 1987 stock market crash, and some posts on X are calling the coming session "Black Monday 2.0". Friday's closing data show a sharp tech pullback; they do not predict which way markets will move Monday.

For perspective, all three major indexes are still up for the year: the S&P 500 by 11.9%, the Nasdaq by 12.5% and the Dow by 8.2%, according to the AP.