AI Growth Fears Shake Global Markets as Bonds Rally, Tech Stocks Slide, and Oil Tops $114
Friday, October 23, 2026 | AI Growth Fears Shake Wall Street as Bonds Rally, Oil Tops $114, and Bitcoin Tests Key Support
Market Summary
Thursday brought an important shift in market sentiment. US Treasury bonds recorded their strongest rally in three years while technology stocks sold off sharply. For the first time in this cycle, investors appeared more concerned about AI becoming a risk to economic growth than a source of inflation.
The US 10-year Treasury yield fell 19 basis points to 4.96%, its biggest daily decline since the Silicon Valley Bank collapse in March 2023. Meanwhile, the Nasdaq dropped 2.6%, semiconductor stocks lost 6.7%, and Meta fell nearly 7% after reporting negative free cash flow.
Oil remains another major concern. Brent crude climbed above $114 as geopolitical tensions intensified in the Middle East, complicating the Federal Reserve’s policy outlook.
Our View: We remain cautious. The key question is whether the 10-year Treasury yield can stay below 5%. A sustained move would suggest investors are increasingly pricing in weaker growth. However, elevated oil prices and persistent inflation risks make a lasting bond rally far from certain.
Today’s Main Story: AI Spending Meets Reality
Why Bonds Are Rallying While Tech Stocks Fall
For much of September and October, investors viewed massive AI infrastructure spending as inflationary. Data centers require enormous amounts of electricity, while heavy borrowing pushes financing costs higher.
Thursday’s market reaction suggested a different concern: what happens to US growth if AI investment slows?
Investors moved out of technology stocks and into government bonds, reviving their traditional role as a safe haven.
The shift also affected interest rate expectations. Markets removed nearly an entire quarter-point rate hike previously priced in for next year, while the probability of a December increase fell to 85%.
ING remains skeptical that Treasury yields will stay below 5%, citing inflation, fiscal deficits, and continued AI investment. For now, several consecutive sessions below that level would provide stronger evidence of a lasting change in market sentiment.
Meta’s Cash Burn Raises Bigger Questions
Meta became the center of Thursday’s technology selloff after reporting negative $2.12 billion in third-quarter free cash flow, compared with positive $10.63 billion a year earlier.
The company also raised the lower end of its annual spending guidance from $130 billion to $135 billion and announced plans to issue non-voting Class C shares to help finance its investments.
Shares dropped nearly 7%, while Meta’s credit risk premium reached a record high.
Investors are increasingly questioning how long it will take for AI infrastructure spending to generate meaningful returns.
Nvidia CEO Jensen Huang added to those concerns, warning that demand for capital significantly exceeds available supply.
Smaller AI infrastructure companies were particularly vulnerable. CoreWeave fell 10%, while Nebius lost 7% despite announcing a $3.5 billion credit facility.
The concern is no longer simply how much companies are investing in AI. It is whether future revenue can justify the enormous financing requirements without excessive borrowing or shareholder dilution.
The Fed Faces a Difficult Choice
The bond rally suggests growing concerns about economic growth, but oil prices make monetary easing difficult.
Brent reached $114.31, its highest level in five months, while futures contracts through March remain above $100.
Saudi Aramco ordered the evacuation of its headquarters in Dhahran as regional tensions escalated. Supply concerns also increased following disruptions to oil production in Libya.
Higher energy prices could keep inflation elevated even if economic growth slows.
That leaves the Fed facing an uncomfortable combination: weakening risk appetite, concerns about AI investment, and a persistent inflationary oil shock.
Market Overview
Equities
Wall Street ended Thursday mostly lower, led by technology stocks.
The Nasdaq Composite fell 2.60%, the Nasdaq 100 dropped 2.90%, and the S&P 500 declined 1.21%. The Dow managed a marginal 0.02% gain, while the VIX jumped 14.09% to 19.03.
Semiconductors suffered particularly heavy losses. AMD fell 8.1%, ASML 6.93%, Nvidia 4.4%, and TSMC 4.52%.
There were notable exceptions. Spotify gained 11.1%, Blackstone rose 8.4%, Lockheed Martin advanced 7%, and Apple added 1.23%.
Asian markets remained under pressure. China’s CSI 300 fell to its lowest level since July 2025, while Japan’s Nikkei headed for a weekly loss of approximately 5%.
In Turkey, the BIST 100 dropped 3.08% to 11,220, bringing its weekly loss to 7.04%. With an RSI of 28.33, the index is deeply oversold, although global risk aversion and MSCI-related uncertainty continue to weigh on sentiment.
Foreign Exchange
The US Dollar Index traded near a three-week low at 101.69 as falling Treasury yields reduced demand for the dollar.
The Japanese yen strengthened on safe-haven demand and expectations of further Bank of Japan tightening. USD/JPY briefly reached 156.08 before recovering toward 156.88.
Japan’s inflation rose to 2.1%, above the central bank’s target for the first time in nine months.
The euro traded around 1.1215, while the Canadian dollar and Norwegian krone benefited from higher oil prices.
USD/TRY reached a new high of 49.73, with an RSI of 97 indicating extremely overbought conditions.
Commodities
Brent crude rose to $114.31, gaining 7.92% for the week, while WTI traded at $100.67.
Precious metals failed to attract the safe-haven demand normally associated with an equity selloff.
Gold traded around $4,038 after falling nearly 3% on Thursday and was down 3.17% for the week. Silver stood at $54.36, while palladium remained under pressure.
Instead of gold, investors favored government bonds and the Japanese yen for protection.
Copper showed greater resilience, rising 1.5% to $6.46, while natural gas suffered a sharp weekly decline of 15.67%.
Cryptocurrency
Bitcoin recovered toward $82,000 after briefly falling below $81,000 overnight. It traded around $81,837 on Friday morning, down 1.25% over 24 hours.
BTC is currently testing its 50-day simple moving average, an important short-term technical level.
Ethereum traded at $2,404.73, Solana at $104.46, and XRP at $1.3266.
Approximately $435 million in crypto futures positions were liquidated over the previous 24 hours, including $385 million in long positions.
US spot Bitcoin ETFs also recorded $381 million in outflows on Thursday, reversing part of the $1.08 billion accumulated earlier in the week.
Without sustained ETF inflows, the foundation for a stronger Bitcoin rally remains uncertain.
Crypto markets are also sensitive to Japanese yen movements. A stronger yen can trigger the unwinding of carry trades, putting additional pressure on risk assets.
On the infrastructure side, Ethereum developers canceled the planned October 26 Glamsterdam deployment on the Hoodi testnet after identifying potential gas-accounting issues affecting smart contract execution. No replacement date has been announced.
The Bigger Picture: AI’s Three Growing Risks
AI investment is no longer a straightforward growth story.
The industry now faces three interconnected challenges:
- Financing risk: Rising borrowing costs and new share issuance could pressure valuations and dilute existing shareholders.
- Growth risk: A slowdown in data center investment could weaken US economic activity, particularly after AI infrastructure became an important growth driver.
- Political risk: Opposition to energy-intensive data centers and delays in obtaining electricity connections or local permits could disrupt expansion plans.
Australia’s NextDC recently reduced its revenue outlook by one-third because of electricity connection delays, illustrating how infrastructure constraints can affect even well-funded projects.
These risks will not necessarily hit markets simultaneously. Financing concerns are most visible in credit spreads and smaller technology stocks, while growth concerns are reflected in Treasury yields and cyclical sectors.
Key Levels to Watch
| Asset | Key Level | Why It Matters |
| US 10-Year Treasury | 4.96% / 5.00% | Sustained trading below 5% could confirm a shift toward growth concerns |
| Bitcoin | 50-day moving average | A key momentum test amid $381M in ETF outflows |
| Brent Crude | $114 | Elevated oil prices keep inflation and supply risks in focus |
| BIST 100 | 11,220 | RSI near 28 signals oversold conditions, but downside risks remain |
| Gold | $4,038 | Weak safe-haven demand despite the equity selloff |
| Meta Credit Spread | Record high | A warning sign of rising financing concerns in AI |
Upcoming Economic Calendar
| Date | Key Events |
| October 23 | Flash PMIs from Europe, the UK, and US; UK and Canadian retail sales; Michigan consumer sentiment; Moody’s France rating review |
| October 26 | Ethereum Glamsterdam Hoodi testnet deployment canceled; new date pending |
| October 27–28 | Federal Reserve policy decision; Canadian and New Zealand central bank decisions expected during the week |
| October 29–30 | ECB and Bank of Japan policy meetings |
| October 30 | Deribit monthly crypto options expiration |
| November 3 | US midterm elections |
| November 11 | MSCI index review announcements |
Final Takeaway
Thursday’s selloff was about more than disappointing technology earnings. It raised a broader question about whether the AI investment boom can continue supporting economic growth without creating unsustainable financing pressures.
For now, bonds are regaining their defensive role, technology valuations are facing greater scrutiny, and elevated oil prices are limiting the Fed’s flexibility.
The next few sessions will be important. If Treasury yields remain below 5% while technology stocks continue to struggle, markets may be entering a more persistent period of growth-related uncertainty.
Until there is clearer confirmation, a cautious approach remains appropriate.