Wall Street’s Worst Week Since June

The AI trade just found out what 5% interest rates cost.

Wall Street had its worst week since June. The cause was debt, not demand. Meanwhile, inflation ran hot again and oil climbed back above $100.

Today: why one leveraged AI company rattled the whole Nasdaq, whether the Fed hikes again in 10 days, and what $100 oil means for your portfolio and your gas tank.

Here’s what matters this weekend.

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The S&P 500 lost 1.1% Friday and the Nasdaq sank 2.1%. Both posted their worst week since June. For the week, the Nasdaq fell 4.5%.

The trigger was CoreWeave, the Nvidia-backed company that rents AI computing power. Its shares fell more than 11% Friday, pushing weekly losses to nearly 25%, on worries about its $50 billion debt load, per Reuters. The yield on its 2031 bond briefly topped 16% Thursday.

The pain spread. The Philadelphia semiconductor index fell for an eighth straight day, matching its longest losing streak since 2006. D.A. Davidson’s Gil Luria told CNN that these companies are “the subprime tranche of the AI trade”.

Why it matters: The AI buildout is increasingly funded with borrowed money. At today’s rates, that money isn’t cheap.

Nvidia owns roughly 10% of CoreWeave. If you own an S&P 500 index fund, you own this risk whether you meant to or not.

What we're watching: CoreWeave’s bond yields, which are a better warning sign than its stock price. Also Meta’s spending guidance Wednesday.

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September CPI rose 0.6% on the month and 3.7% from a year earlier, above the 3.6% economists expected. Gasoline surged 9.1% and accounted for more than half the monthly increase. Core inflation rose to 2.6% from 2.4% in August.

The odds of an October rate hike jumped to 50% after the report. Then Fed Chair Kevin Warsh spoke in Bangkok Friday and gave no signal either way. After his remarks, hike odds for the Oct. 27-28 meeting fell below 15%.

Why it matters: The Fed raised rates in September for the first time in three years. The 10-year Treasury yield ended Friday at 5.07% after briefly reaching 5.13%.

That yield drives mortgage rates, bond prices and stock valuations. It also means you’re getting paid real money to hold Treasuries again.

What we're watching: Goldman Sachs expects the Fed to skip October and deliver its final hike of the year in December. Officials are in a quiet period through October 29, so this week’s data will do the talking.

WTI crude closed Friday at $101.41, up 3.5%, and Brent finished at $109.86, up 3.7%. WTI is up 16% over the past 10 days.

The backdrop hasn’t improved. The head of US Central Command said the naval blockade has kept $25 billion of Iranian oil off the market. Egypt is seeking authorization to deploy troops to defend Saudi Arabia as fighting with the Houthis escalates.

Why it matters: WTI is up 74% from a year ago. AAA put regular gas at $4.33 a gallon this week, versus $3.16 a year earlier.

Oil feeds inflation. Inflation feeds the Fed. The Fed feeds your bond yields. Energy stocks rose Friday, partly cushioning the Dow, a reminder of why sector balance matters.

What we're watching: The EIA raised its fourth-quarter Brent forecast to $105. Valero and SLB report this week.

The SSA announced a 3.6% COLA, the largest since 2023, adding about $75 a month to the average retirement benefit. Energy prices drove much of it.

Investor takeaway: Medicare Part B premiums are typically announced in mid-November and come straight out of your check. Your net raise will be smaller.

As of mid-October, 30-year mortgage rates remain above 7%. A year ago, the average was 6.34%.

Investor takeaway: Locked-in owners stay put, keeping supply tight. Monday’s homebuilder sentiment survey will show how much that’s hurting builders.

Markets move. Headlines catastrophise. But somewhere inside the noise is the story that matters — the opportunity, not the fear. 

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THE NUMBER

$3.18 Billion. That’s what the US Treasury pays in interest on the national debt. Every day.

Net interest totaled $963 billion in the first 10 months of fiscal 2026, according to the CBO. That’s up 14% from a year earlier, driven by a larger debt and higher long-term rates.

It compounds. The CBO expects interest costs to roughly double to $2.1 trillion by 2036. That’s money that buys no roads, troops or benefits.

For you, this is part of why the 10-year sits above 5%. More debt means more Treasury supply. More supply means buyers demand higher yields.

Earnings: GE Aerospace, GM, Netflix (Tue); Tesla, IBM, Meta, Texas Instruments (Wed); Lockheed Martin, Blackstone, P&G (Thu); American Express, SLB (Fri).

The Main Event: Meta and Tesla on Wednesday. After a week of AI financing jitters, Meta’s spending plans will tell you whether the biggest buyers are still writing checks. Wall Street expects revenue of $63.35 billion, up 23.6%.

Also Monday: the 39th anniversary of Black Monday. Markets have long memories, even when they don’t act like it.

The Dow rose 0.7% while the Nasdaq fell 4.5%. Same week, same economy, very different outcomes.

Why it matters: The selloff was concentrated in tech and AI, not the whole market. If your portfolio leans toward dividend payers, energy or financials, you likely felt this week far less.

Markets enter the week caught between hot inflation, $100 oil and a credit scare in AI. The economy isn’t breaking, but the cost of money is finally biting.

We’ll be watching AI bond spreads, Meta’s spending plans and the 10-year yield for signs the pressure is spreading.

See you before the bell Monday.

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