Wall Street slides as AI-heavy firms face debt worries and oil prices surge
U.S. stocks closed lower on Friday, with the Nasdaq dropping sharply as investors feared debt-laden AI companies may struggle to repay loans and higher oil prices added pressure.
On Friday, U.S. equities ended in the red, with the Nasdaq down 2.15% to 26,140.03 and the S&P 500 slipping 1.09% to 7,659.44, as investors grew uneasy about the financing outlook for AI-heavy companies. Debt-laden firms like CoreWeave, backed by Nvidia, tumbled 12% and saw bond yields exceed 15%, while Broadcom dropped 4.5%, extending the PHLX chip index’s eight-day losing streak. Rising oil prices—up more than 3% amid Middle East supply concerns—added to the caution, prompting a rotation into energy and utilities, which posted gains of 2.47% and 1.4% respectively.
Analysts highlighted that upcoming third-quarter earnings from Tesla, Meta Platforms and Procter & Gamble could further influence market direction, while some Anthropic investors are considering a lower valuation for its pending IPO. Federal Reserve Chair Kevin Warsh expressed optimism about the U.S. economy, but markets still anticipate unchanged rates this month. Overall, the week saw the Nasdaq fall 4.48% and the S&P 500 decline 1.95%, their steepest weekly drops since June.
Why it matters
The decline signals growing investor doubt about AI company debt sustainability and rising energy costs.
How this story developed
- Oct 2 Seoul market slips modestly as US stocks close higher
- Oct 8 The market recorded a third straight day of losses.
- Oct 13 South Korean equities fell over 3% as Asian markets slipped, mirroring a 2.7% drop in a US semiconductor index and fading AI optimism.
- Oct 13 The decline continued a multi‑day slide in the index.
- Oct 14 US semiconductor index fell 2.7% and the Nasdaq 100 slipped 0.7%, widening the regional decline.
- Oct 15 KOSPI dropped over 7% and triggered a 20‑minute circuit‑breaker halt and sell‑side sidecar activation.
- Oct 16 CoreWeave rebounded 6% after a steep decline, lifting broader semiconductor shares.
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