Wall Street tumbles as worries about AI trade and high oil prices weigh

Traders work on the floor of the New York Stock Exchange before the closing bell in New York City on Oct 16.

Wall Street tumbled on Oct 16, with CoreWeave, Broadcom and other AI-related technology stocks under renewed pressure, while a jump in oil prices spooked traders heading into the weekend.

The Nasdaq was on track for a loss of over 4% for the week, hammered by concerns that debt-laden AI infrastructure companies may not turn profits in time to repay debts, particularly with borrowing costs expected to rise.

Nvidia-backed CoreWeave slumped 12%, bringing its loss over the past five sessions to about 25%. The data centre operator’s bonds also sold off sharply this week, pushing yields above 15%.

Broadcom fell 3.6%, and the PHLX chip index sank 2.5%, on track for its eighth straight day of declines.

Investors on Oct 16 were also watching oil prices jump more than 3% due to Middle East supply worries.

“There is some fear in the market,” said Rob Haworth, senior investment strategist at US Bank Wealth Management in ​Seattle.

“High oil prices, in particular, tend to weigh on the price/earnings multiple of stocks, and so I think you have investors looking to be cautious into the weekend rather than take more risk.”

Adding to concerns around AI financing, some current Anthropic investors and prospective investors are weighing a lower valuation for the company in its upcoming IPO, Reuters reported, citing people familiar with the matter.

The Nasdaq declined 2.19% to 26,128.13 points, while the Dow Jones Industrial Average was down 0.55% at 51,891.77 points.

Six of the 11 S&P 500 sector indexes declined, led lower by communication services, down 2.52%, followed by a 2.38% loss in information technology.

The S&P 500 was set for its steepest weekly loss since January, and the Nasdaq was heading for its sharpest weekly fall since June.