US equities broadly closed lower on Friday as a sell-off in artificial intelligence and technology stocks pushed the Nasdaq to its weakest weekly performance since June. Investors are weighing the financing burden of AI infrastructure spending, while oil prices and elevated interest rates add to pressure on corporate operations. Earnings from Netflix, Tesla, Meta and other major companies during the week of October 19 will offer new evidence on demand, margins and the returns from technology investment.
Nasdaq falls 2.50% as AI debt spreads widen
The Dow Jones Industrial Average fell 0.34% to 52,002.41, while the S&P 500 declined 1.09% to 7,659.44. The Nasdaq 100 dropped 2.50% to 29,187.55. The 10-year US Treasury yield stood at about 5.10%, and the VIX index was 19.99. Gold rose 0.33% to $4,188.50 an ounce, while crude oil fell 1.58% to $98.97 a barrel. Bitcoin slipped 0.34% to $81,583.13.
The retreat in AI stocks reflected growing concern over whether the massive investment required for data centres and computing capacity can be sustained. Cloud infrastructure companies CoreWeave and Nebius Group each fell about 15% over the five trading sessions through Friday morning. Goldman Sachs data showed that spreads on AI-related high-yield bonds widened by 25 basis points between October 13 and 14, reaching 360 basis points above US Treasuries. Spreads on non-AI debt widened by only 2 basis points over the same period.
CoreWeave's debt load has come under particular scrutiny, with the yield on some of its bonds briefly approaching 15%. Higher financing costs could make new data-centre projects more expensive and increase investor focus on when these companies can generate enough cash flow to cover their costs. The pressure also spread to Nvidia, Advanced Micro Devices and Micron Technology, whose shares fell 1.43%, 5.95% and 5.63%, respectively, on Friday.
Tesla unveils Roadster with deliveries targeted for 2028
Tesla Chief Executive Elon Musk unveiled a redesigned Roadster on Thursday at a presentation linked to SpaceX. The electric sports car uses rocket-style thrusters associated with SpaceX technology and is capable of brief airborne manoeuvres. Musk described it as the world's first flying car and said it can accelerate from a standstill to 60 miles per hour in less than one second.
Tesla shares initially rose in premarket trading after the announcement but later turned lower, closing down 2.13% at $354.72. Deliveries of the new Roadster are expected to begin in 2028. The second-generation model was first announced in 2017 and has since faced several delays. Investors will also focus on Tesla's results this week, including electric-vehicle demand, profit margins and the company's autonomous-driving plans.
Oil rises on supply concerns as Brent briefly tops $110
Brent crude briefly climbed above $110 a barrel this week as an escalation in the Middle East heightened concern about energy supplies. An attack by Iran in the Strait of Hormuz increased fears that traffic through the critical oil-shipping route could be disrupted. Ukraine's threat to target more Russian refineries also kept supply risks in focus.
Higher oil prices could raise transport and manufacturing costs while increasing household spending on petrol and energy. With borrowing costs already elevated and inflation closely watched, changes in energy prices may also factor into the Federal Reserve's interest-rate considerations. Exxon Mobil and Chevron rose 2.46% and 2.59%, respectively, on Friday, benefiting from stronger oil prices even as the broader stock market weakened.
Netflix cuts about 1,000 jobs ahead of October 20 results
Netflix said on Wednesday that it would cut about 1,000 jobs, or roughly 6% of its workforce, as it seeks to control costs and concentrate investment. Co-Chief Executive Officers Ted Sarandos and Greg Peters said in a memo to employees that the company remained on track to meet its full-year performance targets and would continue investing in areas that support growth.
Netflix faces competition from YouTube and other streaming services. The company remains profitable, but growth in viewing time has stalled, while subscriber gains increasingly depend on its crackdown on password sharing and lower-priced advertising-supported plans. Live sports, gaming and new content are also areas where Netflix is spending to attract viewers and retain existing users. Investors will examine revenue growth, margins and the effect of the job cuts on costs when the company reports third-quarter results on October 20.
Character.AI seeks bankruptcy protection as Disney secures IP licence
Privately held chatbot start-up Character.AI filed for protection under Chapter 11 of the US Bankruptcy Code, citing rising legal, regulatory and operating costs among its business challenges. Disney agreed to pay $20 million during the bankruptcy proceedings for a non-exclusive, perpetual licence to Character.AI's intellectual property.
The arrangement gives Disney access to the technology without requiring it to acquire the entire company. The ultimate financial effect will depend on how Disney uses the assets. Character.AI's situation also shows how consumer-focused AI companies can face legal expenses, regulatory scrutiny and uncertainty over their commercial models at the same time.
Packed earnings calendar puts AI spending under scrutiny
Investors will look to this week's results for evidence of whether AI spending is translating into sustainable returns, and for signs of how high financing costs and energy prices are affecting profits. On October 19, Steel Dynamics is expected to report after the close, with consensus estimates of earnings per share of $5.47 and revenue of $6.43 billion. Fifth Third Bancorp is expected to report before the open, with estimated EPS of $0.83 and revenue of $3.34 billion. Crown Holdings and W. R. Berkley are expected to post EPS of $2.26 and $1.15, respectively.
On October 20, Netflix is expected to report EPS of $0.82 and revenue of $12.87 billion. SpaceX is expected to post EPS of $0.14 and revenue of $12.89 billion. General Motors, GE Aerospace, RTX, 3M and Philip Morris International are also scheduled to report, with expected EPS of $3.70, $2.01, $1.78, $2.39 and $2.30, respectively.
On October 21, Tesla is expected to report EPS of $0.45 and revenue of $27.94 billion. Meta is expected to post EPS of $6.58 and revenue of $63.34 billion, while IBM is expected to report EPS of $2.86 and revenue of $16.82 billion. AT&T, Texas Instruments, semiconductor-equipment supplier Lam Research and Abbott Laboratories are also due to release results.
On October 22, Procter & Gamble is expected to report EPS of $1.88 and revenue of $22.8 billion. Lockheed Martin, Comcast, Western Digital, Nokia, Spotify and Nebius are also on the calendar. Nebius is expected to report a loss of $0.74 per share and revenue of about $904.82 million, making its results particularly relevant after the recent decline in AI infrastructure stocks.
On October 23, Exxon Mobil is expected to report EPS of $3.99 and revenue of $117.48 billion. American Express is expected to post EPS of $4.58 and revenue of $20.12 billion, while SLB is also scheduled to report on Friday. Exxon Mobil's production outlook and profitability will be assessed alongside volatile oil prices and supply concerns. American Express's results may provide further indications of consumer spending and credit quality.
Other companies drawing attention this week include SpaceX, General Motors and GE Aerospace on Tuesday; Tesla, Meta, IBM and Texas Instruments on Wednesday; and Procter & Gamble, Lockheed Martin, Comcast and Western Digital on Thursday. Exxon Mobil, American Express and SLB are the main Friday releases. Caterpillar, Dell Technologies, Colgate-Palmolive, Lowe's, CVS Health and Procter & Gamble will also trade ex-dividend during the week. After the Nasdaq's worst weekly performance since June, investors will use earnings, corporate spending plans and debt-financing conditions to assess the returns being generated by technology investment.