AI stock slump and rising oil prices push Wall Street sharply lower
U.S. equity markets fell sharply on Friday as AI-related shares like CoreWeave and Broadcom dropped and oil prices jumped on Middle East supply concerns.
Wall Street closed markedly lower on Friday, with the S&P 500 down 1.10% to 7,658.62, the Nasdaq Composite falling 2.15% to 26,137.85, and the Dow slipping 0.36% to 51,990.05. AI-focused companies such as CoreWeave and Broadcom led the sell-off, driven by concerns that debt-laden AI infrastructure providers may not generate profits quickly enough to service their obligations as interest rates rise. CoreWeave's bonds surged in yield, exceeding 15%, and the PHLX chip index recorded its eighth consecutive decline.
Meanwhile, oil prices climbed over three percent due to Middle East supply worries, prompting investors to adopt a cautious stance. Senior investment strategist Rob Haworth noted that higher oil prices tend to compress stock price-to-earnings multiples, dampening risk appetite. Additional market sentiment was affected by mixed signals from the Federal Reserve and upcoming earnings reports from major firms like Tesla, Meta Platforms and Procter & Gamble.
Why it matters
The drop highlights investor anxiety over AI financing and rising energy costs, which could affect broader market stability.
How this story developed
- Oct 13 Asian markets tumble as US chip slump drags South Korean shares below 3%
- Oct 14 US semiconductor index fell 2.7% and the Nasdaq 100 slipped 0.7%, widening the regional decline.
- Oct 15 CoreWeave’s shares dropped 6% and its 2031 bond yields rose above 16% as investors fret over its $50 billion debt load and AI-related borrowing.
- Oct 16 CoreWeave rebounded 6% after a steep decline, lifting broader semiconductor shares.
- Oct 18 CoreWeave’s bond yields rose above 16 % and default‑insurance costs jumped to about 1,000 basis points.
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