Wall Street closed a turbulent week mixed, with the tech-heavy Nasdaq slumping 4.48% for the week as investors questioned the cost of the AI buildout, oil prices climbed above $116 a barrel and attention turned to next week's Federal Reserve meeting and Big Tech earnings, according to Reuters and RTHK.

Why is the AI trade wobbling?

Investors are focused on the debt and spending needed to fund Silicon Valley's artificial intelligence expansion. Meta Platforms' plan to issue a new class of shares to raise money for AI ambitions sent its stock down about 7%, its worst day since July, and CoreWeave's debt load has also weighed on sentiment.

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"Investors are still trying to wrap their heads around the sheer size of this AI spend," James O'Day, head of equities at Citizens Bank, told Reuters. Analysts at Deutsche Bank said in a note that several pressures collided at once, according to Investing.com.

What else is moving markets?

  • Brent crude rose above $116 a barrel, its highest since late April, on fears of Middle East supply disruption, lifting the S&P 500 energy sector to a record.
  • French bond yields jumped amid social unrest and fiscal strain, widening the French-German spread by the most in a day since March 2020.
  • September CPI rose 3.7% year over year, up from 3.4% in August, according to Seeking Alpha.
  • Telecom stocks fell after a report that SpaceX is seeking cell sites for a wireless carrier, while cell tower operators gained.

What happens next?

About one-third of S&P 500 companies report quarterly results next week, including Alphabet, Microsoft and Amazon, three of the biggest AI spenders. The Fed is expected to hold rates steady on Wednesday, but investors will look for signals about December. US consumer sentiment slipped near a record low in October, according to University of Michigan data cited by RTHK.

FAQ

Why did the Nasdaq fall so sharply?

Tech shares fell as investors worried that mounting debt and possible stock sales to fund AI spending could dilute shares and pressure profits.

What are investors watching next week?

Big Tech earnings, the Federal Reserve's policy statement and oil prices driven by Middle East tensions.