Fixed Income & Equities Markets Week in Review

Mixed weekly index moves masked a pickup in market volatility this week. The Nasdaq Composite fell 0.5%, while the S&P 500, Dow Jones Industrial Average, and Russell 2000 all advanced on the week through Thursday’s close. AI spending and financing concerns offset some positive compute demand signals, extending last week’s defensive rotation out of AI-linked names.

The AI trade initially rebounded from last week’s rout, helped by oversold conditions and positive compute demand signals from SpaceX and Super Micro Computers. However, market scrutiny of AI financing persisted as higher yields on AI infrastructure-linked debt and widening credit default swap spreads weighed on sentiment, culminating in a 2.6% decline for the Nasdaq Composite on Thursday. Neocloud firms have been at the epicenter of market scrutiny with CoreWeave declining another 9.4% this week through Thursday, bringing its October losses to more than 36%. Companies delivering demonstrable growth and return on investment may begin to separate themselves from those struggling to justify AI spending levels. While investors appeared more willing to overlook the higher rate backdrop earlier in the year, AI funding concerns now appear to be carrying a greater weight.

The 10-year US Treasury yield was near 5% Friday morning, down from multidecade highs earlier this month as investors sought safety. Lower yields and defensive positioning helped the Health Care, Consumer Staples, and Utilities sectors gain 2.6%, 2.4%, and 1.5%, respectively, for the week through Thursday. Market breadth has improved so far in the fourth quarter after narrowing in the third. Through Thursday, the equal-weighted S&P 500 outperformed its capitalization-weighted counterpart by approximately 2% for the week and more than 5% for the month. Lower bond yields and upbeat earnings outside of AI have supported broader participation, alongside some company commentary which highlighted consumer resilience and industrial strength.

Energy volatility remained an inflation risk as progress in US–Iran diplomacy remained unclear. Concerns about renewed military action increased after President Trump said the US was not negotiating with Iran and reports indicated that the US and Israel were preparing for strikes on Iran following the US midterm elections. West Texas Intermediate crude rose back above $100 per barrel this week, reaching $103 Friday morning and keeping inflation concerns elevated.

Next week, attention turns to the Federal Reserve’s (Fed) October meeting and a busier third-quarter earnings calendar. Target rate probabilities from the CME FedWatch Tool indicate a 90.6% chance of no Fed rate hike next week, up from 84.5% a week ago; probabilities also show approximately an 80% chance of at least one more 25-basis-point increase by year-end. Fed Chair Kevin Warsh’s Wednesday remarks will be closely watched. Meanwhile, 179 S&P 500 constituents report next week, including Alphabet, Amazon, and Microsoft. Hyperscaler results, guidance, and AI spending commentary could shape sentiment toward the AI trade heading into year-end. The S&P 500’s blended third-quarter earnings growth rate stands at 29.5%. The index’s next-12-month price-to-earnings multiple is 18.7x, below both its five- and ten-year averages.

As of October 15, 2026