Last week, investors worried that a resilient economy and rising gasoline prices could keep inflation and borrowing costs high. Tech stocks bore the brunt amid doubts over lofty valuations and the cost of the AI buildout. But the Dow’s gain pointed to a retreat from tech, not a wholesale move out of stocks.

 

Here’s how the major indexes performed and the stories behind the numbers.

 

 

How the Major Indexes Fared

• The S&P 500 declined 1.95%.
• The Nasdaq 100 tumbled 5.49%.
• The Dow Jones Industrial Average edged up 0.67%.

 

 

Mounting Pressure Points

Oil fueled inflation concerns. Attacks on Middle East shipping briefly pushed Brent crude to $110 a barrel Friday. Before that, the September Consumer Price Index data release showed just how much energy drove up prices. Gasoline prices jumped 9.1% in September, accounting for more than half of the month’s consumer-price increase and raising annual inflation to 3.7%. Shelter and services also firmed, so this was more than a gas-pump story. Given this pressure, markets are continuing to price in a rate hike from the Federal Reserve before the end of the year.

 

Higher rates tested the AI boom. Debt-funded AI spending drew fresh scrutiny as investors asked who can afford the buildout, and at what return. CoreWeave, an indebted AI cloud provider, saw its borrowing costs soar and its stock swing wildly. Chip and software stocks also slid, even as Bank of America analysts said existing AI capacity is nearly fully used, a sign of strong demand.

 

Consumers and banks held firm. Rate worries aside, shoppers kept spending. Retail sales rose 0.8% in September, well above forecasts, though pricier gasoline boosted the gain; excluding gas stations, sales rose just 0.2%. Big-bank earnings showed rising card spending and lending, with fewer card balances going unpaid.

 

 

 

The Week Ahead

This week, earnings take center stage, with Netflix, Tesla, and Meta among the companies reporting. Investors will look for evidence that profits can support stock prices, with Meta’s AI spending plans under particular scrutiny. Notably, October 23rd brings early readings on business activity and the final University of Michigan consumer survey, including inflation expectations. Additionally, the Federal Reserve will meet next week on October 27th and October 28th. With the Fed in its pre-meeting quiet period, economic data and company commentary will carry extra weight.

 

 

 

 

This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

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