Weekly Market Update for October 16, 2026
by Gavyn Jensen-Schneider, Research Associate
Treasury yields and equity indices fell this week as market sentiment rotated away from AI technology names. The S&P 500 finished the week down -1.95%, while the Nasdaq fell -4.48%. The 10-Year Treasury yield, an interest rate indicator, closed at 5.09%, down -15 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, closed at 4.34%, up +1 bp from last week.
A swing in AI-related sentiment hit semiconductors and neocloud providers this week, lowering the PHLX Semiconductor index (SOX) by -11% and neoclouds CoreWeave (CRWV) and Nebius (NBIS) by around -15%. Scrutiny focused on the financing underpinning the AI buildout, as some analysts fret over its long-term health. These antsy swings in AI sentiment have been occurring throughout the year, typically in the weeks leading up to an earnings report; a similar move happened the week of July 17, with SOX falling around -10% when concerns of “irrational exuberance” emerged during the first week of the Q2 earnings season.
A beneficiary of this week’s risk-off sentiment in equities was fixed income. The rotation of funds into long-dated bonds halted the month-long rise we’ve seen in yields, instead reversing course and bringing 10-Year and 30-Year Treasury yields down by 15 bps each.
The alleviation of some long-term yield pressures was surprising given the September Consumer Price Index and Producer Price Index inflation reports from Wednesday and Thursday. Topline and core CPI inflation were ahead of Wall Street expectations at 3.7% and 2.6%, respectively. Topline PPI inflation was 90 bps ahead of expectations at 6.3%, while core PPI was 60 bps ahead at 5.0%. Elevated fuel and energy prices increase production costs, translating into price inflation for consumer goods and services. This might be what caused the hotter-than-expected September inflation, though, as Chairman Warsh would say, it’s the underlying trends that matter, not just one data point.
Earnings season keeps rolling next week, with Facebook’s parent company Meta, Netflix, Capital One Financial and T-Mobile among the notable reports. Economic data releases are less prevalent, with Thursday’s leading indicators and weekly jobless claims, followed by Friday’s final reading of the University of Michigan Consumer Sentiment index for October.
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