Stocks are Mixed on Rotation Out of Chipmakers and AI Stocks

The S&P 500 Index ($SPX) (SPY) is up by +0.03% today, the Dow Jones Industrial Average ($DOWI) (DIA) is up by +0.65%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.82%.  December E-mini S&P futures (ESZ26) are up +0.05%, and December E-mini Nasdaq futures (NQZ26) are down -0.97%.

Stock indexes are mixed today, with the Dow Jones Industrial climbing to a 1-month high.  CoreWeave is down more than -7% to lead cloud infrastructure stocks lower as concerns about the company’s credit risk linger.  Chipmakers also remain under pressure, weighing on the broader market.

Higher bond yields are also undercutting stocks after Fed Chair Warsh made no remarks on monetary policy or his outlook for the US economy late Thursday evening at the IMF annual meeting in Bangkok.  The 10-year T-note yield is up +4 bp to 5.13%.

On the positive side, a rotation out of AI stocks and chipmakers into software and industrial stocks is boosting the Dow Jones Industrials today.

Today’s US economic news was mixed for stocks.  The Sep import price index ex-petroleum rose +0.8% m/m, stronger than expectations of +0.6% m/m, the largest increase in 5 months and a sign of price pressures.  However, Sep manufacturing production rose +0.3% m/m, right on expectations.

Stocks have support from the prospect of solid quarterly earnings results that began this week.  Goldman Sachs on Monday raised its three-month view on global equity markets to overweight from neutral, saying. “Earnings growth remains supportive for equities and the recent valuation de-rating has improved asymmetry into the third-quarter earnings season.” According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +25% from a year earlier, up from a July estimate of 22%.  As of today, 40 of the S&P 500 companies have reported results, with 78% beating estimates.

Nov WTI crude oil prices (CLX26) are down -0.37% today on signs of higher Middle East exports after US Central Command said more than 40 vessels moved through the Strait of Hormuz over the past 24 hours. However, crude oil prices have underlying support amid risks to global oil supplies.  Yemen's Houthi rebels continue drone and missile attacks across Saudi Arabia, including energy infrastructure.  Also, Iranian attacks on shipping attempting to transit the Strait of Hormuz have increased in recent weeks, threatening a rebound in energy supplies from the Middle East.

Markets are discounting a 17% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.

Overseas stock markets are higher today.  The Euro Stoxx 50 is up +0.74%.  China's Shanghai Composite closed up +0.24%.  Japan's Nikkei-225 Stock Average closed up +1.39%.

Interest Rates

December 10-year T-notes (ZNZ6) are down -8 ticks today.  The 10-year T-note yield is up +4.0 bp to 5.125%.  Dec T-notes are under pressure today after global stock markets recovered, dampening safe-haven demand for T-notes.  Also, a lack of guidance from Fed Chair Warsh at the annual IMF meeting in Bangkok weighed on T-notes.  In addition, higher crude oil prices today have boosted inflation expectations and are weighing on T-notes.  

European government bond yields are moving higher today.  The 10-year German bund yield is up +2.7 bp to 3.440%.  The 10-year UK gilt yield is up +1.8 bp to 5.392%.

ECB Governing Council member and Bundesbank President Joachim Nagel said. "The ECB has raised interest rates twice, and if the situation remains as it is, we don't rule out the possibility that we may have to take further action."

Markets are discounting a 9% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.

US Stock Movers

Chipmakers and AI-infrastructure stocks are continuing their week-long slide today, weighing on the broader market.  Seagate Technology Holdings Plc (STX) and Western Digital (WDC) are down more than -4%, and Advanced Micro Devices (AMD), ARM Holdings Plc (ARM), Micron Technology (MU), Marvell Technology (MRVL), and SanDisk (SNDK) are down more than -3%.  Also, Lam Research (LRCX), Intel (INTC), KLA Corp (KLAC), and Qualcomm (QCOM) are down more than -2%.

CoreWeave (CRWV) is down more than -7% to lead losers in the Nasdaq 100, and cloud infrastructure stocks are lower as debt concerns linger after swaps priced in a more than 50% chance the company will default on its debt within five years.  Also, Nebius Group NV (NBIS) is down more than -5%, and Applied Digital (APLD) is down more than -3%.  In addition, Arista Networks (ANET) is down more than -2%, and Lumentum Holdings (LITE) and Oracle (ORCL) are down more than -1%.

Cybersecurity stocks are sliding today.  Cloudflare (NET), Fortinet (FTNT), and Okta (OKTA) are down more than -5%, and Crowdstrike Holdings (CRWD), Palo Alto Networks (PANW) and SentinelOne (S) are down more than -4%.  Also, Zscaler (ZS) is down more than -2%. 

Software stocks are moving higher for a second day today as investors rotate out of chip stocks into software. Autodesk (ADSK) and Thomson Reuters (TRI) are up more than +2%.  Also, Intuit (INTU), ServiceNow (NOW), Atlassian (TEAM), and Adobe Systems (ADBE) are up more than +1%. 

Omeros (OMER) is down more than -13% after the European Medicines Agency issued a negative opinion on the company’s application for its narsoplimab therapy.

Fox Corp (FOXA) is up more than +1% after Bank of America Global Research double-upgraded the stock to buy from underperform with a price target of $85.

Earnings Reports (10/16/2026)

Citizens Financial Group Inc (CFG), M&T Bank Corp (MTB), Regions Financial Corp (RF), Travelers Cos Inc/The (TRV), Truist Financial Corp (TFC).

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.