AI Stocks Fell Again. Their Lenders Barely Moved.

The Dow Gave Up an Early Gain as Chips and Software Sold Off

Shortly before 2 p.m. Eastern, the S&P 500 was down about 1% and the Nasdaq Composite about 1.9%. The Dow gave up an early gain. The Nasdaq was down more than 4% for the week.

Software fell hardest. The iShares Expanded Tech-Software Sector ETF (IGV) dropped about 4.7%, with Okta (OKTA) and Snowflake (SNOW) down 9% to 10%.

Money moved into defensive and energy shares. The Energy Select Sector SPDR Fund (XLE) rose about 2% and the Utilities Select Sector SPDR Fund (XLU) about 1.3%. The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) slipped only about 0.3%. The VIX volatility index was near 20, up from about 16.5 on Thursday.

Treasury's August data on foreign buying of U.S. securities arrive at 4 p.m.

Investor Signal

The heaviest selling hit companies that need outside money to grow. Buyers went to businesses with steady cash and regulated returns. Bonds stayed calm, so Friday looked like a stock rotation more than a credit scare. A sharp drop in HYG alongside falling stocks would change that read.

CoreWeave's Stock Fell Again. Its 2032 Notes Held Steady.

Thursday's bounce did not hold. CoreWeave (CRWV) traded near $60.26 around 3 p.m., down about 13.5%. It stayed above Thursday's low of $59.51. Nebius (NBIS) and Iren (IREN), two other AI cloud providers, fell about 9% to 10%.

The bonds mostly sat this one out. The yield on CoreWeave's 9.625% notes due 2032 was flat at midday, CNBC reported, and HYG slipped about 0.3%.

The debt had already repriced earlier in the week. The 2032 notes, sold at par in June, now yield about 15%, Reuters reported. The cost of insuring its debt passed 1,000 basis points, a record, according to S&P Global Market Intelligence data.

JPMorgan and Jefferies called the selloff overdone. Under a 2025 agreement, Nvidia will buy up to $6.3 billion of CoreWeave's unsold capacity through April 2032.

Investor Signal

Stockholders sold Friday while the 2032 notes barely moved. The equity is absorbing a cost of capital the notes set earlier in the week. NiSource (NI) said Microsoft will fully fund the power plants and lines for its Indiana data center campus, and NiSource rose about 3%. CoreWeave's next financing will show what new money costs it.

The Next Chip-Backed Loan Priced at the Wide End

The same repricing reached the next borrower in line. Volta's $5 billion AI loan priced Thursday at 6.5 percentage points over the benchmark rate and 95 cents on the dollar, Bloomberg reported. Price talk had started near 5 points in September.

Banks underwrote only the $1.3 billion piece, which backs Volta's data-center lease payments. The other $3.7 billion, which finances about 36,000 Nvidia chips, was sold on a best-efforts basis. The whole package is unrated.

Investor Signal

A softer Fed would lower the base rate under loans like Volta's. It would not shrink the 6.5-point spread, which pays for borrower and chip risk. Futures priced an October hike near 15% Friday morning, CNBC reported. If the next chip-backed loan prices at or above Volta's spread, lenders are charging for AI risk the Fed does not set.

Bitcoin Slipped 1%. Strategy Fell 11% as an Index Door Narrowed.

Crypto stocks traded with the AI builders Friday, not with bitcoin. Bitcoin was near $81,260 shortly before 2 p.m., down about 1%. Iren, a bitcoin miner that now rents computing power to AI customers, fell more than 9%.

Strategy (MSTR) was down about 11% around 3 p.m., in its first full session since MSCI adopted rules barring "non-operating companies" from its global indexes. Reuters reported Strategy is on MSCI's list of potential deletions. The final list comes Nov. 11, and changes take effect at the Nov. 30 close. Strategy says funds tracking MSCI indexes hold about 3% of its shares.

Strategy also declared daily November payouts on its 12% preferred, contingent on an Oct. 28 shareholder vote.

Investor Signal

Index-fund demand for its common stock and sales of preferred stock are the two channels Strategy uses to raise money for bitcoin. Friday put pressure on both. Part of the drop matched the wider selloff, so the index effect cannot be separated. Strategy's management will recommend keeping the 12% rate until the preferred trades steadily near $100. A return to that level would show the second channel can carry the model if the first one closes.

Brent Broke Out of Its Range. Import Prices Show the Cost.

Brent crude traded near $109.60 around 3 p.m., up more than 3% and at a four-week high. It had held between about $104 and $107 since Oct. 8.

No single Friday event explains the jump. Oil flows through the Strait of Hormuz ran about a third below normal in the week to Oct. 13, ship tracker Kpler said. Ukraine resumed strikes on Russian refineries. The IEA's diesel release speeds up barrels already pledged rather than adding new ones.

Oil reaches the Fed through prices like these. September import prices rose 1.1%, and 8.1% from a year earlier, the most since 2022. Fuel import prices jumped 4.8% in the month. Nonfuel import prices rose 6.0% over the year.

Investor Signal

Bonds barely reacted, with the 10-year Treasury yield near 5.10%. Traders may be treating oil as a cost the Fed can look past. The price rise outside fuel makes that harder to argue. A Brent finish above $107 next week, with Strait flows still near two-thirds of normal, would test the bond market's calm.

The Fed Goes Quiet With Three Hot Price Reports on the Table

Producer prices rose 1.3% in September, the most since March 2022.

Fed Chair Kevin Warsh declined to preview the Oct. 27-28 meeting. "I don't prejudge meetings," he said in Bangkok. Kalshi's October hike contract fell to 13 cents Friday morning, from about 29 cents before he spoke.

Cleveland Fed President Beth Hammack said Thursday the Fed "might need to move even more" if an inflationary mindset takes hold. The 10-year yield closed Thursday at 5.10%, down 9 basis points.

Investor Signal

The quiet period runs from Saturday through Oct. 29, so no official will push back on market pricing before the decision. The data argue for tightening. Bonds and hike odds argue the cycle is close to done. A two-year yield that rises while the 10-year falls would point to one more hike and a quick stop.

Stock buyers marked down the companies that borrow to build AI on Friday. Their lenders mostly held still, after repricing earlier in the week. Money moved toward businesses that pay their own way.

The Fed will stay silent until its decision. Next week's loan pricings and Brent's range will show whether money for AI builders is still getting more expensive.