AI Pressure Persists, Oil Up as Price Data Looms
Published as of: October 23, 2026, 9:19 a.m. ET
(Friday market open) Wall Street nears the weekend in jumpy, risk-off fashion. Thursday's dramatic plunge in tech showed the market remains vulnerable to spiking oil and mega-cap spending concerns, and volatility remained near recent highs early today as stocks continued to retreat and oil climbed again. Treasury yields, which collapsed Thursday, climbed early, but so did a handful of chip stocks as participants gingerly dipped their toes back in the water.
"Sentiment around the AI trade continues to be under pressure," said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research (SCFR). "SpaceX delivered an incredible beat and raise, and increased capital expenditures. Both ASML and Taiwan Semiconductor delivered solid 'beat and raise quarters,' yet the post-earnings reaction from investors is still to sell, which conveys that the AI trade is perceived as too risky right now."
A flight to perceived safety amid fears of renewed Middle East violence drove tech down Thursday. Debt concerns—especially in France—helped Treasuries as money sought U.S. sanctuary. The 10-year Treasury note yield fell below 5%, a one-month low. However, the tech sell-off wasn't the whole story. Six S&P sectors rose and the broader market is on pace for slight weekly gains.
Three things to watch
- Takeaways from a wild day: Thursday was one of just five days since 1996 where advancing S&P 500 stocks outnumbered decliners by more than 100 but the index fell more than 1%. The last time was January 27, 2025, and before that 1997. Bond strength lifted non-tech shares. "We seem to be getting closer to peak bond stress, which can give equities room to breathe and work on closing the breadth gap that has opened over the past several months," said Kevin Gordon, head of macro research and strategy at SCFR. The S&P 500 Equal Weight Index (SPXEW) rose 0.8% Thursday even as the S&P 500 Index fell 1.2%. The equal-weight index weighs all components equally rather than by market capitalization, meaning less exposure to mega-caps and more to rate-sensitive names. In sum, 337 of 500 S&P 500 components climbed even with the index lower. The PHLX Semiconductor Index (SOX) plunged 6.7% and is down 15% this month. AI stocks flinched on worries about Meta Platform's (META) spending and as Nvidia's (NVDA) Jensen Huang told CNBC demand for neoclouds—specialized, high-performance cloud computing providers—is firm but capital is scarce.
- Bond market awaits central banks: Meetings of the Bank of Japan (BoJ) and European Central Bank (ECB) next week, along with next Wednesday's Federal Reserve decision, will likely influence yields from here. Early today, chances of a Fed rate hike in October fell to just 8%, according to the CME Fed Watch Tool, despite hot September inflation data. Analysts don't expect an ECB or BoJ hike next week, Reuters said. Instead, there's a sense that all three banks might wait until December and raise then. Chances of a Fed hike before the end of the year remain lofty at 84%. Policymakers will have some new inflation expectation data to check today with the final University of Michigan October Consumer Sentiment report, due at 10 a.m. ET. Long-run inflation expectations rose to 3.5% in the preliminary October report from September's 3.4%, and another rise might grab the Fed's attention. That might outweigh the importance of headline sentiment, which fell to a historic low of 46.3% in the initial October data. Consensus is for no change, Briefing.com.
- Cloud demand focus ahead: Investors didn't seem impressed by Meta and Tesla (TSLA), the first two Magnificent Seven firms to report, amid worries about AI spending by Meta. Shares of Meta fell nearly 7% yesterday. The real earnings blitz comes next week when mega caps like Microsoft (MSFT), Alphabet (GOOGL), and Amazon (AMZN) report Wednesday and Thursday, offering a view of cloud market demand from the triumvirate. These companies reported promising results in their cloud divisions in the second quarter. Before the cloud companies dominate at mid-week, a different kind of network comes into view. Monday brings Verizon (VZ) results after the telecom sector came under pressure this morning. AT&T (T), T-Mobile (TMUS), and Verizon fell after Bloomberg reported that SpaceX (SPCX) seeks access to 80,000 U.S. cell sites for wireless network. This hinted at what analysts said when SpaceX reported earlier this week about its possible threat to traditional telecom firms. Verizon fell 4.6% early today.
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On the move
- Chip stocks, which had their worst day in months Thursday, were mixed early today. A handful of names climbed, including SK Hynix (SKHY), Sandisk (SNDK), and Micron (MU), showing signs of investors venturing back into memory stocks.
- Looking back at yesterday's dramatic declines, some names falling most were Lumentum (LITE), Arm Holdings (ARM), Marvell Technology (MRVL), Applied Materials (AMAT), and Intel (INTC). Advanced Micro Devices dropped 8%, and Nvidia fell 4%.
- Western Digital (WDC) dropped 2.7% early today despite earnings and revenue topping estimates for the memory chip name and a rise in guidance. The company also raised its dividend.
- Bloom Energy (BE) sagged 3.3% early despite quarterly results that exceeded Wall Street's expectations and a guidance rise. Bloom fell sharply Thursday and is one of the energy firms that have ridden AI's coattails.
- American Express (AXP) dipped 1.2% in early trading even though earnings were stronger than analysts had expected and revenues were in line. The company also raised guidance for fiscal 2026 earnings per share.
- SpaceX climbed 2.4% early after yesterday's 9% retreat. That followed sharp gains Wednesday on earnings in a roller coaster week. Today's move came after Phillip Securities upgraded SpaceX to buy from sell, noting that compute demand is outpacing supply and the company's contracts are renewing at higher prices per watt.
- Deckers Outdoor (DECK) dropped 7% ahead of the open after beating analysts' earnings per share estimate but missing on revenue. It also lowered its fiscal 2027 revenue guidance. Key brands Hoka and Ugg sequentially declined for the second straight quarter.
- Six of the Magnificent Seven fell yesterday, with Apple (AAPL) the only green one.
- Moderna (MRNA) plunged almost 20% Thursday after details from a cancer vaccine study got shared on social media ahead of time, the Wall Street Journal reported. The results appeared positive but perhaps short of heightened expectations. Shares fell another 4% this morning.
- Lam Research (LRCX), a maker of equipment used to build chips, fell almost 12% Thursday. Results beat expectations but guidance only met expectations—a disappointment to investors hoping for signs of even more optimism over chip and AI spending.
- Technically, key support for the S&P 500 Index between 7,600 and 7,620 held on Thursday and remains important today.
More insights from Schwab
Back to work for bonds? Today's Schwab On Investing podcast focuses on bonds, including what's driving the recent volatility and their relationship with the S&P 500. The question is whether bonds can still "do their job" in the current climate. Other topics include an early look at third quarter earnings progress and a preview of next week's Fed meeting.
To GAAP or not to GAAP: Learn the difference between GAAP and adjusted results in our new report on company earnings. It's important to make the distinction if non-GAAP are used. Examining only one of the two can distort perceptions. Ultimately, adjusted earnings can't hide long-term problems shown by revenue struggles.
Chart of the day
Data source: Nasdaq, Cboe. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
The 10-year Treasury note yield (TNX:CGI) had a session to remember yesterday, falling about 18 basis points to 4.95%, the lowest in a month and below its 50-day moving average (blue line) of just below 4.98%. It's the first time since late June it's been under the 50-day, and the yield is down almost 40 basis points from recent two-decade highs above 5.36%. Yields fell in a flight to perceived safety that sent the PHLX Semiconductor Index (SOX) down 6.7% yesterday to the lowest level since late July.
The week ahead
October 26: Expected earnings from Verizon (VZ), Welltower (WELL), Cadence Design Systems (CDNS), Nucor (NUE), and Public Storage (PSA).
October 27: September durable goods, October Consumer Confidence, September new home sales, and expected earnings from Coca-Cola (KO), Novartis (NVS), Boeing (BA), Corning (GLW), Freeport-McMoRan (FCX), HCA Healthcare (HCA), Johnson Controls (JCI), American Tower (AMT), United Parcel Service (UPS), Visa (V), Seagate (STX), Waste Management (WM), NXP Semiconductors (NXPI), Baker Hughes (BKR), and Teradyne (TER).
October 28: FOMC rate decision and expected earnings from Microsoft (MSFT), Alphabet (GOOGL), T-Mobile (TMUS), ServiceNow (NOW), GE Vernova (GEV), Amphenol (APH), UBS (UBS), Phillips 66 (PSX), and Vertiv (VRT).
October 29: Third quarter GDP, September PCE prices, September core PCE prices, and expected earnings from Amazon (AMZN), Eli Lilly (LLY), Intel (INTC), Sandisk (SNDK), Gilead Sciences (GILD), Mastercard (MA), Merck (MRK), Caterpillar (CAT), Shell (SHEL), Anheuser-Busch Inbev (BUD), Bristol-Myers Squibb (BMY), Altria (MO), Stryker (SYK), Starbucks (SBUX), and Mondelez (MDLZ).
October 30: Expected earnings from ExxonMobil (XOM), AbbVie (ABBV), Chevron (CVX), BP (BP), Sanofi (SNY), and General Dynamics (GD).
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