Advisors weigh concentration risk as oil tops $100 and Fed’s Oct. 28 decision nears
The tech-heavy Nasdaq Composite fell 2.14% on Friday to close its worst week since June. An artificial intelligence sell-off, oil above $100 a barrel and hotter inflation data left investors bracing for the Federal Reserve’s Oct. 27-28 meeting.
The S&P 500 lost 1.09% to 7,659.44, and the Dow Jones Industrial Average fell 175.28 points, or 0.34%, to 52,002.41, CNBC reported. For the week, the Nasdaq shed more than 4% and the S&P 500 about 2%, while the Dow gained 0.7%. Both the Nasdaq and the S&P 500 ended below their 50-day moving averages. The Cboe Volatility Index rose above 22 for the first time in four months, CNBC said.
The split matters to advisors with clients concentrated in AI-linked names. The week that hurt growth-heavy portfolios left the blue-chip Dow higher.
Chipmakers led the retreat. The VanEck Semiconductor ETF lost 3% Friday and 10% for the week, its biggest weekly decline since April 2025, amid concerns about competition from China. In South Korea, the Kospi fell 14.5% on the week, its worst since October 2008, as Samsung and SK Hynix tumbled nearly 20% and 25%.
Debt worries spread from CoreWeave
Investors are also questioning how the AI build-out is financed. Shares of CoreWeave, a Nvidia-backed AI cloud provider, fell nearly 12% Friday, bringing weekly losses to 25%, CNBC reported. Reuters reported that yields on its 2031 bonds topped 16%. It also reported that the cost of insuring the company’s roughly $50 billion in debt implied a nearly 63% chance of default within five years.
Oracle, which has also borrowed heavily for data centers, closed 8.8% lower Wednesday, SiliconANGLE reported. In a memo to staff reported by SiliconANGLE, CoreWeave CEO Mike Intrator wrote that “when you are building a new type of technology company there will be periods of time when the market misunderstands and acts irrationally. We are confident in our backlog which more than supports all of our debt obligations.”
“The question is: Is this a systemic issue?” said Michael Rosen, chief investment officer at Angeles. “Obviously, increased debt issuance is something to observe and continue to watch and be concerned about if it continues to get to levels of excessiveness. But we’re not remotely close to that right now.”
Inflation, oil and the Fed
Energy prices added pressure. West Texas Intermediate futures settled at $101.41 a barrel, up 3.51%, and Brent rose 3.72% to $109.86. Iran escalated attacks in the Strait of Hormuz, and Ukraine vowed to keep striking Russian refineries, CNBC reported.
September consumer prices rose 3.7% from a year earlier, above the 3.6% forecast. Producer prices climbed 6.3% against an expected 5.5%, CNBC reported. The Fed raised its benchmark rate a quarter-point to 3.75%-4% in September, its first increase since 2023, according to The Associated Press.
Fed chair Kevin Warsh told an International Monetary Fund event in Bangkok he would not prejudge the October or December decisions, AP reported. “We made very clear we’d deliver price stability,” he said, according to NBC News.
The CME Group’s FedWatch tool put the odds of a hold at 82%, CNBC reported. Yet Bank of America strategist Michael Hartnett has turned “risk-off” for the next month. He cited the “need for [the Federal Reserve] to hike on Oct. 28” among four reasons.
For advisors weighing bond duration, Darrell Cronk, president of Wells Fargo Investment Institute, urged caution and said the firm isn’t buying longer-term bonds yet. “Financial conditions are tightening, long-term borrowing costs face upward pressure, and investors are increasingly demanding additional compensation to hold longer-maturity bonds,” he said. “Currently, we do not believe we have reached the peak in interest rates for this cycle, so caution is warranted.”
Warsh’s Bangkok appearance was his last public one before the Fed’s pre-meeting quiet period, CNBC reported. That leaves incoming data to shape expectations until the Oct. 27-28 meeting.
