The Nasdaq Composite fell 4.5% in the week to Friday, October 16, closing at 26,140.03. Reuters called it the index’s sharpest weekly fall since June. In the same five sessions, the Dow Jones Industrial Average gained 0.7%.
Those two numbers describe one market that moved in opposite directions. Companies selling the hardware behind artificial intelligence (chips, servers, storage and the data centers that house them) had one of their worst weeks of the year. Oil producers, drugmakers and the companies that stock grocery shelves had one of their best. Heading into Monday, the open question is which side of that split gives way first.
Same Market, Opposite Weeks
The sector funds show the split most clearly. Based on closing prices for the Select Sector SPDR funds, consumer staples gained 5.0% for the week, energy 4.9% and health care 3.5%. Technology fell 7.7%. The VanEck Semiconductor ETF lost 10.5%, putting a gap of about 15.5 percentage points between the best and worst corners of the market in a single week.
Friday finished the job. The Philadelphia Semiconductor Index fell for an eighth straight session, and on the Nasdaq, new 52-week lows outnumbered new highs 263 to 49, according to Reuters. Even so, the S&P 500 closed only about 2% below its October 6 record and was still up 11.9% for the year. The Nasdaq sat about 5.3% under its own record, roughly halfway to the 10% decline traders usually call a correction.
The Bottom of the Board
The deepest losses weren’t in the best-known chip names. CoreWeave, which rents out AI computing capacity, lost 25.2% for the week, the worst of the large AI names tracked here. Its bonds sold off too, with Reuters reporting yields above 15%. Right behind it were the server makers. Hewlett Packard Enterprise fell 25.0% and Dell Technologies 22.9%, and Arista Networks, which sells data-center networking gear, lost 18.3%.
Storage and memory came next. Seagate fell 18.4%, Sandisk 17.9% and Western Digital 16.4%, with Micron down 14.6%. Lam Research, a maker of chip-production equipment, lost 17.2%, and Vertiv, which supplies power and cooling systems for data centers, fell 15.0%. Nvidia, the stock most associated with the AI boom, fell a comparatively mild 6.6%.
Why the Server Makers Fell Hardest
The server selling had a specific trigger. On October 14, Barclays analyst Tim Long downgraded both Dell and HPE to Equal Weight from Overweight. He wrote that valuations across corporate-focused hardware names “have run too far” and that he doesn’t yet see a meaningful AI pickup in business spending. He still expects both companies to beat earnings estimates, but by smaller margins.
That landed on a market already worried about how the AI build-out is being paid for. CoreWeave’s struggles made the financing question concrete, and Broadcom chief executive Hock Tan said on October 12 that capital is now the biggest constraint on AI growth. In Korea, worries about memory-chip competition from China added to the pressure. The KOSPI fell 7.6% on Thursday before rebounding 2.05% on Friday to 5,668.05.
The Top of the Board
The winners were mostly companies that have nothing to do with data centers. Oil was the clearest case. Brent crude settled at $109.86 a barrel on Friday, up 4.9% for the week and its highest settlement since May, after a missile was aimed at a Saudi export port and Iranian attacks continued to cut flows through the Strait of Hormuz. Chevron gained 6.1% for the week and ExxonMobil 5.9%.
Defensive stocks did nearly as well. Walmart rose 6.7%, Coca-Cola 6.6% and Procter & Gamble 5.4%. In health care, Eli Lilly gained 6.6% and UnitedHealth 5.8%. Not all of tech suffered, either. Intuit was the best performer among the large-cap stocks tracked here, up 7.4%, and Apple gained 2.0%.
Bruised, Not Broken
The largest U.S. companies mostly held up. Microsoft fell 1.1% for the week, Meta Platforms 1.3% and Alphabet 3.1%. Amazon lost 4.7%. Nvidia’s 6.6% decline was the worst of the group, and it was still far smaller than the losses at the companies that build and equip data centers.
That pattern matters for what comes next. The sell-off has hit hardest at the companies whose revenue depends on AI spending continuing at its current pace. The large platforms doing most of that spending have so far been treated much more gently.
Oil Up, Yields Down, Hike Odds Fading
The week’s macro signals pulled in different directions. Producer prices rose 1.3% in September, according to BLS, and were up 6.3% from a year earlier, after consumer inflation came in at 3.7%. Yet the 10-year Treasury yield fell to 5.09% on Friday from 5.19% on Wednesday, as money moved into bonds.
Fed Chair Kevin Warsh helped calm rate fears on Friday. Speaking in Bangkok, he said the world had “broadly conformed” to the Fed’s expectations since its September hike and that he doesn’t “prejudge meetings,” per Axios. CME FedWatch odds of an October rate hike fell to about 15% after his remarks, from 54% after the inflation report.
Bull Case vs. Bear Case
Nobody can say with confidence where stocks open on Monday. What the evidence supports is two competing readings of the same week, each backed by credible sources.
The Bull Case for Monday
The case for a rebound rests on the idea that hardware prices have fallen much further than demand. TSMC reported record quarterly revenue this week, and ASML said its planned supply won’t fully meet customer demand in 2027 or 2028. KB Securities analyst Kim Dong-won called the slide in Samsung and SK hynix an excess correction rather than a fundamental problem, noting that earnings forecasts for both are being revised upward. JPMorgan strategists said chips may be nearing an “inflection point,” according to Business Insider.
Rates add to that case. Falling Treasury yields and fading odds of an October hike remove one of the pressures that started the sell-off. Earnings season could also help. Reuters reported that analysts expect third-quarter earnings growth of more than 30%, led by the AI-related megacaps.
The Bear Case for Monday
The case for more downside starts with oil. Brent rose more than 3% on Friday alone, and U.S. Bank Wealth Management’s Rob Haworth told Reuters that high oil prices “tend to weigh on the price/earnings multiple of stocks.” Barclays economists still expect quarter-point rate hikes in December and January, according to Reuters, so the reprieve on rates may be short.
Credit markets haven’t calmed either. CoreWeave’s bonds yield above 15% and its stock fell another 12% on Friday, a sign that investors are still testing how much debt the AI build-out can carry. Barclays’ Long sees no meaningful AI spending pickup at businesses yet. And with S&P 500 forecasts compiled by Reuters on October 6 ranging from 7,400 to 8,100, the index’s Friday close of 7,659.44 sits only about 3.4% above the lowest of them.
Five Things to Watch From Monday
FAQ
Not by the usual definition. The Nasdaq closed Friday about 5.3% below its October 6 record and the S&P 500 about 2% below, while a correction is generally a 10% decline. The damage has been concentrated in AI hardware stocks, many of which have fallen far more than the indexes.
The company reports say no. TSMC posted record quarterly revenue and ASML said demand will outrun its planned supply through 2028. The selling reflected doubts about how the AI build-out is financed, rising oil prices and analyst concerns about business AI spending, not a reported drop in orders.
Barclays downgraded both server makers on October 14, saying their valuations had run too far and business AI spending hasn’t picked up meaningfully. Dell fell 22.9% and HPE 25.0% for the week, against 6.6% for Nvidia.
Brent crude rose to its highest settlement since May on Middle East supply concerns, lifting Chevron and ExxonMobil. Consumer staples and health care are traditionally defensive sectors, and both gained as money moved out of AI hardware.
Nobody can say with confidence. The bull case points to strong chip demand, falling yields and lower odds of an October rate hike. The bear case points to rising oil, stressed AI credit and a Fed that may still hike in December. The watchlist above covers the signals that should settle it over the coming week.
Sources
- Associated Press via ABC News: How Major US Stock Indexes Fared Friday 10/16/2026, October 16, 2026
- Associated Press via La Nacion: How Major US Stock Indexes Fared Tuesday 10/6/2026, October 6, 2026
- Reuters via The Lufkin Daily News: Wall Street Tumbles as Worries About AI Trade and High Oil Prices Weigh, October 16, 2026
- Stocktwits via Yahoo Finance: Nasdaq 100 Records Worst Week in 18 Months as Investors Steer Clear of Chipmakers, October 16, 2026
- StockAnalysis.com: Historical Price Data (Select Sector SPDR funds, VanEck Semiconductor ETF and individual stocks; closes for October 6, 9 and 16, 2026)
- 24/7 Wall St.: Dell Falls 8% as Barclays Cuts Rating and Target to $574; Hewlett Packard Enterprise Drops 5%, October 14, 2026
- Reuters via The Lufkin Daily News: Broadcom CEO Sees Capital Hurdle to AI Growth, ‘Casino’ in AI Investing, October 12, 2026
- Seoul Economic Daily: KOSPI Closes Up 2.05% at 5,668.05, October 16, 2026
- EnergyNow: Oil Surges as Middle East Supply Fears Push Brent Near $110 and WTI Above $100, October 16, 2026
- U.S. Bureau of Labor Statistics: Producer Price Index, September 2026, October 15, 2026
- U.S. Department of the Treasury: Daily Treasury Par Yield Curve Rates, October 2026
- Axios: Warsh Signals Steady Fed Outlook Despite Inflation Jump, October 16, 2026
- Benzinga: October Fed Hike Odds Collapse After Warsh Remarks, October 16, 2026
- TSMC: TSMC Reports Third Quarter EPS of NT$29.43, October 15, 2026
- ASML: ASML Reports €11.7 Billion Total Net Sales and €5.0 Billion Net Income in Q3 2026, October 14, 2026
- Seoul Economic Daily: KOSPI Selloff Overdone, W-Shaped Rebound Possible: KB Securities, October 16, 2026
- Business Insider via AOL: Here’s What’s Driving This Week’s $1 Trillion Wipeout in Chip Stocks, October 15, 2026
- Reuters via Investing.com: Factbox: Major Brokerages’ Forecasts for S&P 500 Index in 2026, October 6, 2026
- Federal Reserve: Meeting Calendars and Information (FOMC 2026 schedule)
- StockTitan: Earnings Calendar for the Week of October 19, 2026
Disclaimer
Sources: U.S. Bureau of Labor Statistics, U.S. Department of the Treasury, Federal Reserve, company regulatory announcements, StockAnalysis.com price data, and wire and financial press as cited. Weekly percentage changes are AktieGo calculations from closing prices. AktieGo doesn’t independently verify third-party data, so figures should be checked at the time you’re reading this.
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