Market Recap - Week of October 12 - 16, 2026

2 days ago

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The S&P 500 index fell 1.95% this week, weighed down by a slide in the technology sector amid questions over artificial intelligence funding.

The S&P 500 ended Friday's session at 7,659.44. The market benchmark is now up 0.1% for the month and 12% this year.

Worries about AI funding ramped up as concerns mounted about CoreWeave's (CRWV) debt and credit risk. CoreWeave's shares fell 25% this week as yields on its debt continued to climb. Investors are worried about the impact of higher borrowing costs on some of the most highly leveraged companies in the AI space.

Economic data showed US industrial production increased more than expected in September as manufacturing output rebounded despite weakness in the auto component. Industrial output grew 0.7% last month, following a revised 0.1% gain for August, according to Federal Reserve data. The consensus estimate was for a smaller 0.4% increase in September in a survey compiled by Bloomberg. NOTE: The increase was mostly driven by Utilities, another data point that depends heavily on AI spending.

Just four of the S&P 500's 11 sectors fell this week, but their losses were large enough to outweigh the other seven sectors' gains. The technology sector slid 6.4%, followed by a 1.9% drop in consumer discretionary, a 1.6% decline in communication services, and a 0.9% slip in industrials.

Ciena (CIEN) and Coherent (COHR) were the hardest-hit stocks in the technology sector as well as the overall S&P 500 for the week. The stocks tumbled 26% each amid investors' concerns about potential impacts to companies tied to AI infrastructure.

Tesla (TSLA) was among the top decliners in consumer discretionary, falling 7.3%. The National Highway Traffic Safety Administration has opened an investigation into the electric vehicle maker over claims that its driverless taxis have exceeded posted speed limits in active school zones, according to a document on the NHTSA website.

Last Week's Economic Reports

Headline and core CPI rose 3.7% last month.
PPI (The Fed's preferred measure of inflation) rose 6.3% year/year
Existing home sales rose 1.5% for the month

Up Next

September Housing Starts
Pending Home Sales
Early estimates of October purchasing managers' indexes

S&P 500 Stylebox and Sector Returns

Once again, I'll note that so far this year, value has outperformed growth across the board, and it's not even close for large or midsize companies.

How to read the stylebox: The horizontal axis represents investment style, which can be value, blend, or growth for stocks and mutual funds. The vertical axis represents stock market capitalization, categorized by company size as large, medium, and small. The number in each box represents the category's percentage growth at the intersection of the column and row. For example, large-cap value is in the top-left corner box of the 9 boxes, so the large-cap value category is up (or down) by the percentage shown in that box. The stylebox is NOT the S&P 500; it's the whole US stock market.

Thought of the Week

Third-quarter earnings are expected to deliver another impressive headline, with S&P 500 aggregate net income growing 35% from a year ago, nearly three times its 10-year average. However, beneath the surface, the pace of growth varies considerably across the market.

As this week’s chart shows, earnings are expected to grow 13% after excluding the Technology and Energy sectors and three AI-related companies: Amazon from Consumer Discretionary, and Alphabet and Meta in Communication Services. While that is well above the 8% average of the past decade, the widening gap highlights where the acceleration is coming from. Together, the excluded sectors and companies are expected to contribute nearly 77% of the increase in S&P 500 earnings this quarter.

Slower does not mean weak. In fact, analysts became more optimistic as the quarter progressed. Third-quarter earnings estimates increased 1.4% between June and September, compared with an average decline of more than 2% in a typical quarter. A record 72 companies also entered reporting season with guidance above consensus, suggesting the optimism is coming from companies as well as analysts.

For investors, the distinction between breadth and acceleration is important. Earnings growth has broadened well beyond a handful of companies, providing a healthier foundation for the market. However, profit acceleration remains concentrated in areas benefiting most from the AI bubble and stronger energy earnings. With valuations elevated, continued market gains may require both sides of the earnings story to hold: exceptional growth from the leaders and durable, above-trend growth from everyone else.

Source: JP Morgan (edited)

Thank you to all who attended this month's Market Update webinar!

You can watch the replay here:

Treasury Yields Hit 5.3% & Largest Buyback In History – Monthly Market Update Webinar – October 2026

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