Tech sell-off deepens as credit costs weigh on AI expansion
A 2.14% slide in the Nasdaq Composite capped a bruising week for U.S. equities, as investors grew wary that the aggressive capital expenditure fueling the artificial intelligence boom is hitting a wall of unsustainable debt costs. The tech-heavy index finished the week down 4.5%, its sharpest retreat since June.
By Money Talk·October 16, 2026·2 min read·419 reads
CoreWeave shares plummeted 12%, extending their decline to over 50% from recent highs as the market questions the cloud-computing firm's ability to service its mounting obligations. The broader sentiment reflects a shift in expectations: the promise of future AI profits is struggling to outpace the immediate reality of rising credit costs.
"Inevitably, with the cost of credit and capital rising to unaffordable levels, plans will have to be scaled back and capex reduced sooner or later," said Lorenzo Di Mattia, founder of Sibilla Capital.
This liquidity anxiety rippled into the bond market, where long-term Treasury yields climbed amid fears of persistent inflation and higher oil prices. Federal Reserve Chairman Kevin Warsh, appearing at an IMF event in Bangkok, offered no clarity on future policy, leaving the market to navigate the October rate-setting meeting without a clear signal. While the 10-year Treasury yield rose to 5.097%, the two-year note saw its largest weekly retreat since August, highlighting the volatility in how investors are pricing the path of interest rates.
Comments (0)
No comments yet. Be the first!