Stocks On Pace for Weekly Loss Despite Yield Drop
Published as of: October 16, 2026, 9:13 a.m. ET
(Friday market open) A volatile week marked by renewed inflation and debt fears winds down with major indexes slightly higher aside from the tech-dominated Nasdaq Composite. The S&P 500 Index is on pace for weekly losses thanks to softness in highly capitalized AI stocks, masking improvements across the broader market as Treasury yields cooled before ticking up again this morning. Data and earnings are thin today.
AI and chip-related stocks struggled this week as investors reassessed whether heavily indebted data center, software, and semiconductor companies can turn today's enormous capital spending into tomorrow's profits. Worries about debt and cheaper Chinese memory chip competition dominated. Still, Deutsche Bank kept its buy rating on data center builder CoreWeave (CRWV), saying there's no company-specific reason to justify the sell-off. Anthropic, the AI giant preparing its initial public offering, saw quarterly revenue jump 45% sequentially to nearly $17 billion, The Wall Street Journal reported.
Major indexes recovered Thursday from early inflation-fueled losses as yields dropped sharply, breathing fresh life into many non-tech names. About 43% of S&P 500 stocks trade above their 50-day moving averages, double the start of the month. . Health care rose most yesterday and rate-sensitive areas like financials and consumer discretionary also recharged. "The good news is that we're starting to see a little bit of improvement in breadth," said Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research.
Three things to watch
- Tracking Treasuries after big yield drop: Treasury yields suffered their most dramatic decline since June on Thursday, falling to the lowest level since September 23 for the 10-year note. This could be a function of investors seeking perceived "safety" in Treasuries amid rising geopolitical tension. The coming U.S. midterm election might also be sending investors toward defensive positioning. However, the dive in yields is only a little more than 24 hours old and it's too early to draw conclusions or to state that the long yield rally is over. The swing from a peak near 5.33% to a low of 5.05% in the 10-year yield over 24 hours also suggests investors are balancing renewed Federal Reserve risk against concern that tighter financial conditions and an AI-credit unwind could eventually weaken growth. The latest Atlanta Fed GDPNow estimate for third quarter gross domestic product (GDP) growth stayed at 3.6% yesterday, but the average analyst estimate is well below 3% and has fallen lately from recent peaks. The government unveils its first estimate for third quarter GDP on October 29, a day after the Fed meeting.
- Playing defense in equities: Defensive positioning also showed up in the stock market late this week as consumer staples took the sector lead. Stocks like Walmart (WMT) and Berkshire Hathaway (BRK.B) gained. The defensive rotation is clear: Healthcare and consumer staples gained Thursday as technology fell. Broader participation hasn't collapsed, but mega-cap technology weakness has an outsized index impact. Investors might want to watch credit conditions, Treasury yields, Fed guidance, and semiconductor stabilization rather than chasing either the selloff or the defensive trade. Anthropic, Micron (MU), ASML (ASML) and Taiwan Semiconductor Manufacturing's (TSM) all recently impressed with either results, guidance or both—but markets are questioning the cost of financing the AI buildout. That's been a common theme for about a year since "hyperscalers" began taking on debt to build their AI capabilities even as Treasury yields continued their long ascent, raising borrowing costs.
- Volatility watch returns: After a drowsy start to autumn, volatility awoke this week thanks to hot U.S. inflation readings. Geopolitics also played a role as Ukraine and Russia traded attacks and Iran sank ships in the strait, though gulf oil exports proved resilient. Crude didn't soar but stayed near recent highs around $96 per barrel early today, and companies still wrestle with high diesel costs. Near-term catalysts could keep volatility elevated. The Cboe Volatility Index (VIX) popped from below 15 last Friday to 17.50 Thursday. An approach to near 20 could signal more pressure on stocks, if history is any indication. Institutional investors appear to be buying downside protection. The S&P 500 Index remains above key technical 7,700 support, with 7,500 a larger downside risk around monthly options expiration. A level to watch in the S&P 500 is the 50-day moving average of 7,706, which held so far this week despite tests. One close under that wouldn't necessarily suggest heavier losses. A series of such closes might be more technically damaging.
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On the move
- Tesla (TSLA) popped 3% early after revealing its redesigned Roadster, a two-seat sports car featuring SpaceX-developed compressed gas thrusters. Tesla calls it the world's first flying car.
- SpaceX (SPCX) dropped more than 2% yesterday and is down almost 9% this week despite doubling its Starlink subscribers from a year ago. AI slowdown and debt worries appeared to hurt shares, but the stock got a boost this morning from Tesla's Roadster introduction.
- Alcoa (AA) rose about 2% early Friday after earnings topped consensus, driven partly by improved alumina production, up 11% sequentially.
- Travelers (TRV) dropped 4% in early trading despite the company topping consensus for earnings and revenue.
- CoreWeave was back in the red early today, down 5.6%, as worries about its debt load continued despite positive words yesterday from Nvidia CEO Jensen Huang. According to Bloomberg, Huang said CoreWeave's financial position is improving and doesn't require a backstop.
- Memory chip stocks came under more pressure this morning despite a slight rebound in the tech-heavy South Korean stock market that recently hit six-month lows. Sandisk (SNDK), Micron (MU), and Western Digital (WDC) were all down 1.75% or more early. Advanced Micro Devices (AMD) fell 1.8%. The PHLX Semiconductor Index (SOX) is down seven sessions in a row.
- Apple (AAPL) rose almost 2% before the open after AppleInsider reported that iPhone Duo sold out moments after pre-orders began.
- Semtech (SMTC) jumped 4% early as it raised its third quarter earnings and revenue guidance to above consensus views. The company is a semiconductor and cloud connectivity service provider.
- Earnings accelerate next week with Tesla, Meta Platforms (META), IBM (IBM), and Netflix (NFLX). The last is down 40% so far this year and announced 1,000 job cuts earlier this week affecting about 6% of its workforce, CNBC reported.
- Netflix fell another 3.6% this morning after announcing the replacement of its chief content officer.
- Nike (NKE) jumped more than 5% Thursday, one of many consumer names getting a lift as investors rotated out of AI. There was no major news involving the company, which has suffered dramatic share declines this year.
- Odds of a rate hike later this month are back down to 17%, according to the CME FedWatch Tool, from around 45% Wednesday immediately following the hot Consumer Price Index. The market still pegs chances of a hike before year-end at above 90%.
More insights from Schwab
Commodity stocks eyed as an inflation hedge: For investors exhausted by the recent inflation surge, stocks tracking commodities like oil, metals, and food can be seen as a tool to blunt the impact. However, these stocks are often volatile and subject to the same geopolitical winds that drive commodities up and down. Learn more about how these stocks behave in our newest look at investing.
Discipline amid volatility: Turbulent markets can cause anxiety, but investors aware of their risk tolerance and time horizons can navigate through volatile times, noted Liz Ann Sonders, chief investment strategist at SCFR. Markets drop. Bear markets arrive. That's unavoidable. What matters is how an individual investor responds, and greed and panic aren't strategies.
Labor market dissected: This week's Schwab On Investing podcast features a discussion about the U.S. labor market taking a thorough look at recent ADP payroll data. Some topics include emerging wage trends, the impact of inflation, and AI.
Chart of the day
Data source: Nasdaq, S&P Dow Jones Indices. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
When chip stocks (SOX—purple line) took a ride down this week, the S&P 500 Equal Weight Index (SPXEW—candlesticks) passed them going up the other escalator. The equal weight index, which rose more than 1.3% yesterday to easily outpace the S&P 500 Index, tends to do better in times when breadth is improving and the mega caps step back. This has been such a time, and that also shows in breadth that's improved significantly over the last week.
The week ahead
October 19: Expected earnings from Fifth Third (FITB).
October 20: Expected earnings from GE Aerospace (CE), RTX (RTX), 3M (MMM), General Motors (GM), Northrop Grumman (NOC), Halliburton (HAL), Netflix (NFLX), Intuitive Surgical (ISRG), Chubb (CB), Capital One (COF), and United Airlines (UAL), and September housing starts and building permits.
October 21: Expected earnings from Meta Platforms (META), Tesla (TSLA), Lam Research (LRCX), Texas Instruments (TXN), Philip Morris (PM), Thermo Fisher Scientific (TMO), Abbott Laboratories (ABT), NextEra Energy (NEE), Danaher (DHR), AT&T (T), CME Group (CME), Vertiv (VRT), Elevance Health (ELV), Moody's (MCO), SAP SE (SAP), IBM (IBM), CSX (CSX), United Rentals (URI), and Teradyne (TER).
October 22: Expected earnings from Procter & Gamble (PG), Union Pacific (UNP), Valero Energy (VLO), Blackstone (BX), Lockheed Martin (LMT), Spotify (SPOT), Barclays (BCS), Comcast (CMCSA), Norfolk Southern (NSC), Honeywell (HON), Western Digital (WDC), Newmont (NEM), Bloom Energy (BE), VeriSign (VRSN), and Deckers Outdoor (DECK).
October 23: October S&P Global U.S. manufacturing and services PMIs, October final University of Michigan Consumer Sentiment, and expected earnings from American Express (AXP), Illinois Tool Works (ITW), SLB (SLB).
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