Weekly Market Note

Investors step back from technology as inflation picks up

Week of October 12 – 16, 2026

The S&P 500 fell 1.9% this week, to about 7,659, and ended Friday 2% below the record close it set on October 6. The Nasdaq Composite, which leans more heavily on technology companies, fell 4.5%, its worst week since June. Investors moved money out of technology and other fast-growing companies and into steadier parts of the market, and into bonds, after a hotter-than-expected inflation report and a run of worries about the companies at the center of the artificial intelligence build-out.

Investors stepped back from technology

Chip stocks led the decline. On Tuesday, CNBC reported that CXMT, a Chinese memory-chip maker, said it had made progress on a new design for memory chips, and shares of SK Hynix and Samsung, the world’s two largest memory-chip makers, fell sharply in Seoul. Through the rest of the week, investors focused again on how much the companies building artificial intelligence are borrowing and how fast their revenue is growing. CoreWeave, which rents computing power to AI companies, lost about a quarter of its stock market value for the week, and its bonds fell as well. Reuters reported that Anthropic, the private company behind the Claude AI models, told prospective investors ahead of a planned stock offering that its revenue grew 45% in the third quarter from the second, a slowdown after it more than doubled in the second quarter. Taiwan Semiconductor Manufacturing, the world’s largest contract chipmaker, which manufactures chips designed by other companies, forecast sales above analysts’ estimates on Thursday, but investors focused on its outlook for a slightly lower profit margin.

The PHLX Semiconductor Index, which tracks 30 large chip companies, fell for eight straight sessions through Friday and lost about 11% for the week, its largest weekly drop since March 2025. Third-quarter earnings season also began this week with the large banks, and the results were mixed. JPMorgan Chase reported stock-trading revenue up 49% from a year earlier while bond-trading revenue fell 4%. Across the group, bond trading generally disappointed, while loan growth and loan losses came in better than feared.

Investors favored steadier sectors. Through Friday afternoon, consumer staples rose 4.7%, and health care rose 3.2%. Energy rose 4.6% along with oil prices. Information technology fell 6.6% for the week, though it is still up about 21% this year.

Inflation picked up in September

On Wednesday, the government reported that the consumer price index rose 0.6% in September and 3.7% from a year earlier, up from 3.4% in August. Gasoline prices rose 9.1% during the month and accounted for more than half of the increase. What concerned investors more was the rest of the report. Core inflation, which leaves out food and energy because their prices swing widely, rose 0.3% for the month, and its 12-month rate rose to 2.6% from 2.4%. Both figures were a tenth of a point above economists’ forecasts. Prices of new and used vehicles rose for a third straight month, and shelter costs, the largest part of the index, were up 3.2% from a year earlier. On Thursday, a separate report showed that the prices businesses receive for their goods and services rose 1.3% in September.

The S&P 500 fell 1.1% on the day of the inflation report, ending a run of 53 trading days without a 1% decline, and fell 1.1% again on Friday.

Most of this year’s rise in inflation has come from energy. Since December, overall inflation has risen from 2.7% to 3.7%, while core inflation is back at the 2.6% it was then. The question for the Federal Reserve is whether September’s rise in core prices is the start of a broader trend. The Fed raised its benchmark interest rate by a quarter point in September, to a range of 3.75% to 4.00%, and meets next on October 27 and 28. Trading in interest-rate futures, contracts whose prices reflect where investors expect the Fed’s rate to go, points to no change at that meeting and another increase by December. Based on the current data, the path back to the Fed’s 2% inflation goal looks bumpy, which could keep interest rates elevated.

Bonds gained as investors looked for safety

The 10-year Treasury yield fell to 5.09% on Friday from 5.24% a week earlier, its largest weekly decline since February. Bond prices rise when yields fall, and most of this week’s move came Thursday, as investors moved money out of technology stocks. The Bloomberg U.S. Aggregate Index rose 0.9% through Friday afternoon, its first back-to-back weekly gains since June.

At the International Monetary Fund’s annual meetings in Bangkok, officials warned that renewed inflation or worries about government debt could push bond yields sharply higher. The IMF, which lends to countries and monitors the world economy, projects that global government debt will pass 100% of the world’s yearly economic output by 2030, a level last seen just after World War II, and it named a sharp drop in the prices of AI-related investments among the main risks to the financial system. LPL Research notes that the rise in U.S. yields has so far shown few signs of broader stress in the bond market, and that yields have risen to levels that increasingly compensate investors for these risks. At about 5.1%, the 10-year yield is higher than at any point from August 2007 through the end of 2025.

Markets abroad

Europe’s STOXX 600, an index of 600 large European companies, rose about 2% for the week, helped by its smaller share of technology companies. Asia took the brunt of the selling in chip stocks. South Korea’s KOSPI fell 14.5%, its worst week since 2008, as foreign investors sold heavily, mostly shares of Samsung and SK Hynix. Japan’s Nikkei 225 fell 5.4%, and Taiwan’s main index fell about 4.5%. Both Korea and Japan bounced on Friday. Mainland Chinese stocks fell less, helped by heavy buying of index funds late Thursday that traders attributed to state-backed investors.

Oil rose again

U.S. crude oil rose about 10% for the week, settling at about $101 a barrel on Friday, and is up about 77% this year. Attacks on ships around the Strait of Hormuz continued, and a Singapore-flagged container ship sank there after being hit on Tuesday. Strikes between Saudi Arabia and Yemen’s Houthi rebels added to worries about supply, and U.S. crude inventories fell by 8.6 million barrels in the latest weekly report, the largest drop since February. Two developments helped limit the rise. The International Energy Agency, which coordinates emergency oil supplies for major oil-consuming countries, committed to finish releasing the roughly 100 million barrels of emergency oil still owed from the release it began in March, and reports said Washington was weighing easing sanctions on some tankers to bring down shipping costs. Gold edged lower for the week.

The week ahead

The economic calendar is lighter. Tuesday brings September housing starts and pending home sales. Thursday brings weekly jobless claims and the Conference Board’s index of leading economic indicators, a gauge built from data that tends to turn before the economy does. Friday brings early October readings on business activity from S&P Global and the University of Michigan’s final October survey of consumer sentiment. Federal Reserve officials are in their customary quiet period before the October 27–28 meeting and will not give speeches. Earnings season picks up, with General Motors, GE Aerospace, and Netflix on Tuesday; AT&T, Tesla, IBM, and Texas Instruments on Wednesday; and Lockheed Martin on Thursday.

LPL Research: “Weekly Market Performance, October 16, 2026.” Market data: Sector, MSCI index, bond index, and commodity returns from LPL Research and Bloomberg as of 2:56 p.m. ET on October 16, 2026. U.S. index closing levels as reported by the Associated Press, October 6, 9, 14, and 16, 2026. PHLX Semiconductor Index weekly change as reported by Reuters, October 19, 2026. Consumer and producer price data from the U.S. Bureau of Labor Statistics, October 14 and 15, 2026; economists’ forecasts as reported by CNBC. Treasury yields from the U.S. Department of the Treasury; 20-year history from the Federal Reserve Bank of St. Louis. Federal funds target range and meeting dates from the Federal Reserve; futures pricing as reported by Reuters and the Associated Press. Crude oil settlement prices as reported by major financial news services, October 9 and 16, 2026. Crude inventories from the U.S. Energy Information Administration; International Energy Agency statement, October 15, 2026; vessel sinking confirmed by the Maritime and Port Authority of Singapore, October 14, 2026; Saudi–Houthi strikes and tanker-sanctions reports: Reuters and Agence France-Presse. International Monetary Fund Global Financial Stability Report and Fiscal Monitor, October 2026. CXMT report and memory-chip share moves: CNBC, October 13, 2026. CoreWeave stock and bond moves as reported by Bloomberg and Reuters, October 14 to 16, 2026. Anthropic revenue report: Reuters, October 15, 2026. JPMorgan Chase third-quarter earnings release, October 13, 2026. Taiwan Semiconductor Manufacturing third-quarter results, October 15, 2026, as reported by major financial news services. European and Asian index changes as reported by major financial news services; Korean foreign investor flows as reported by Seoul Economic Daily; Chinese fund trading as reported by Bloomberg. Economic calendar from the U.S. Census Bureau, the National Association of Realtors, the Conference Board, the University of Michigan, S&P Global, and the Federal Reserve. Earnings dates from company announcements. Nasdaq CME Crypto Index settlement values from Nasdaq, cross-checked against LSEG. Important: The opinions in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. Indexes are unmanaged and cannot be invested in directly. Company names are for illustration only and are not a recommendation. Economic forecasts may not develop as predicted. International investing involves special risks, including currency and political risk. Cryptocurrencies are speculative and highly volatile and may not be suitable for all investors. For informational purposes only; not investment advice or a recommendation to buy or sell any security.