AI selloff briefly pushes Nasdaq 100 into correction as rate-hike risks return

An early-week AI rally reversed sharply as technology earnings raised doubts about the returns on heavy investment, briefly pushing the Nasdaq 100 into correction territory. Central banks held rates steady, but stronger inflation signals and calls for further increases kept renewed tightening in view.

Key developments

AI rally turns into selloff

The Nasdaq 100 briefly entered a correction as technology earnings intensified concerns about AI spending, dwindling free cash flow and borrowing costs. The S&P 500 fell 1.8% on its worst day since June, the Nasdaq dropped 2.86%, and Intel plunged 29% on a weak outlook; Alphabet also suffered a record share-price drop.

Doubts about AI returns are weighing on both technology equity valuations and corporate credit.

Oct 29–31 · Bloomberg Markets · Bloomberg Markets · Bloomberg Markets

Fed pauses, officials seek increases

The Federal Reserve held interest rates unchanged despite elevated inflation, matching expectations. Dallas Fed President Lorie Logan subsequently called for at least 50 basis points of additional increases, while St. Louis Fed President Alberto Musalem said a hike was needed soon.

The pause leaves borrowers and bondholders exposed to renewed tightening rather than establishing an end to rate increases.

Oct 27–30 · CNBC Economy · Bloomberg Markets · CNBC Economy

U.S. growth and inflation strengthen

Third-quarter U.S. GDP grew a better-than-expected 3.4%, while September inflation accelerated. Consumer spending rose sharply, largely reflecting higher gasoline and transportation costs.

Stronger activity alongside rising prices weakens the case for monetary easing.

Oct 29 · CNBC Economy · MarketWatch · MarketWatch

ECB pause precedes leadership change

The European Central Bank held its key rate at 2.5%, with markets pricing a 67% chance of a December increase. Christine Lagarde announced that she would leave the presidency early on February 7, 2027.

Euro-area financing costs face further upward pressure as a leadership transition approaches.

Oct 29 · ECB Press · ECB Press · CNBC Economy

BOJ advances policy normalization

The Bank of Japan held rates steady and declared its inflation target achieved, sending the yen higher. It also decided to more than double stock-fund sales from January, after expectations of a pause had left scope for a December rate increase.

Faster asset disposals will increase the supply of stock-fund holdings returning to the market.

Oct 26–31 · صحيفة مال · Bloomberg Markets · Reuters

European gas pressure builds

European gas prices rose above €100 amid fears of escalation in the Iran war, cold-winter forecasts and low storage. Germany missed its winter gas-storage target, forcing greater reliance on spot purchases.

Additional German buying could intensify competition for gas and raise costs for businesses and households across Europe.

Oct 28–Nov 1 · Financial Times · Markets · Financial Times · Markets

UK Budget preserves gilt gains

The UK Budget cut household energy costs, raised taxes on banks and directed billions toward defense, Ukraine and AI. Gilts retained their pre-Budget gains despite slippage in deficit reduction and pressure from energy and interest costs.

Households receive energy-cost relief while banks face higher taxes, without an immediate bond-market increase in government borrowing pressure.

Oct 28–29 · Financial Times · Markets · Financial Times · Markets · CNBC Economy

Jio debut lifts Indian equities

Jio raised $3.2 billion at a $108 billion valuation in India’s biggest listing. Its shares soared on debut, taking its valuation to $130 billion and offering relief to a market hit by the Iran war.

The debut demonstrates investor appetite for Indian equity offerings despite geopolitical pressure.

Oct 28–29 · Financial Times · Markets

Oil majors deliver profit surge

ExxonMobil, Chevron, BP, Shell and TotalEnergies all beat third-quarter expectations, generating combined adjusted net income of $56.3 billion. Conflicts in the Persian Gulf and Russia lifted fuel prices and drove refining results to record highs.

Higher fuel costs are boosting producer and refiner profits even as they pressure energy consumers.

Oct 30 · Bloomberg Markets

Binance reopens withdrawals after theft

Binance resumed customer withdrawals after a $6.3 billion hack blamed on a North Korea-linked group. The exchange said it would reimburse users whose assets were stolen.

Customers regain access to withdrawals, while reimbursement limits their direct losses from the theft.

Nov 1 · Financial Times · Markets

Also this week

Equities and AI

• U.S. stocks rose at the start of the week as Anthropic’s IPO filing revived AI enthusiasm, extended gains on chipmaker strength, and finished higher again after the Fed pause. Yahoo Finance Singapore · Investopedia · Fortune

• Alphabet shares fell after third-quarter sales matched estimates, as technology earnings revived doubts about returns on billions of dollars in AI spending. Bloomberg Markets · Yahoo Finance

• OpenAI reduced its funding target by $10 billion and is now seeking about $20 billion at a $1.25 trillion valuation. Financial Times · Markets

• The Nasdaq lost 5.3% in October, its worst month of the year, with Apple earnings and U.S. nonfarm payrolls next on investors’ agenda. BigGo Finance · www.nationpathindia.com

• Surging AI capital expenditure pushed Big Tech free cash flow below zero. Seeking Alpha · Market News

• The consumer staples ETF XLP reached a record high and delivered its best monthly performance since 1998 as investors sought safety. Seeking Alpha · Market News

• The Nikkei 225 fell to 63,290.11, ending a three-day rally as the AI selloff and slowing Japanese industrial output and retail sales weighed on shares. BBN Times · Equiti Global

Rates and currencies

• Japan’s trend inflation indicator rose above 3% to a three-year high, while business service prices also accelerated ahead of the Bank of Japan meeting. Reuters · Bloomberg · Bloomberg

• The dollar strengthened ahead of central bank meetings, while the yen weakened toward 158 per dollar before the Fed and Bank of Japan decisions. Reuters · Economies.com

• Treasury yields above 5% increased borrowing pressure on U.S. households and the federal government alongside the challenge of financing $2 trillion deficits. CNBC Economy

• The European Central Bank’s enterprise financing survey showed tighter lending conditions. ECB Press

Corporate earnings

• The S&P 500 recorded its second-highest quarterly net profit margin in more than 15 years for the third quarter of 2026. FactSet Insight

• Caterpillar shares headed for their biggest loss in years as businesses outside data centers disappointed, despite a forecast for mid- to high-teens sales growth in 2026 and some engine and turbine orders extending into 2029 and 2030. MarketWatch · Seeking Alpha · Market News

• An earnings scoreboard showed 83% of reporting companies beating earnings-per-share estimates and 79% recording year-over-year earnings growth. Seeking Alpha · Market News

Commodities and credit

• Agricultural commodities tumbled after Lula’s surprise election victory as a steep fall in the Brazilian real made the country’s exports more competitive. Financial Times · Markets

• Gold fell to a one-year low despite concerns about potential fresh Middle East attacks following the U.S. midterm elections. MarketWatch

• The junk-debt selloff deepened as aggressive tactics to move assets beyond creditors’ reach increased concerns about creditor protections. Financial Times · Markets

• OPEC+ reportedly agreed in principle to leave December oil output targets unchanged. Seeking Alpha · Market News

Economy and trade

• France’s credit outlook received an unscheduled downgrade after an unexpected contraction in third-quarter economic output. Financial Times · Markets

• U.S. new-home sales fell to a 676,000 annual rate in September, while a change in the mix of homes sold left the median price 13% below its peak. Calculated Risk

• U.S. house prices rose annually in August, with the Case-Shiller national index up 2.1% and the FHFA measure up 2.4%. Calculated Risk

• U.S. worker compensation trailed inflation for a second consecutive quarter, eroding purchasing power. MarketWatch

• Trump and Carney revived U.S.-Canada trade talks ahead of the U.S. midterm elections. Seeking Alpha · Market News

What to watch

• December policy decisions will test whether the ECB and Bank of Japan turn their pauses into further rate increases.

• Apple earnings and U.S. nonfarm payrolls are the next identified tests for markets; release dates are not given.

• The Bank of Japan’s faster stock-fund sales are due to begin in January, putting the implementation of its asset-disposal decision in focus.

• Christine Lagarde is scheduled to leave the ECB presidency on February 7, 2027, making the leadership transition a pending policy milestone.