October 24, 2026 Market Update

Market Recap: Crude Awakening

Mr. Market’s selloff in technology shares deepened this week as a supply-chain warning from chip-equipment maker Lam Research and heavy AI spending disclosures in Meta’s earnings report triggered Thursday’s steep semiconductor rout. On Friday, the selling spread beyond technology as oil prices jumped on reports of possible renewed U.S. and Israeli strikes on Iran. The Nasdaq and S&P 500 posted a second consecutive weekly loss, while the Dow notched its third straight weekly gain despite Friday’s 650-point decline.

Treasury yields ended modestly lower, with the 10-year dipping below 5% for the first time in a month as investors sought safety from the technology selloff. Meanwhile, WTI crude settled above $103 per barrel, and gold fell below $4,000 per ounce on expectations of continued restrictive Fed policy. The Fed is expected to hold rates steady next week, but traders see roughly a 78% chance of a hike by December.

Rising oil prices are an unwelcome development for an economy already contending with elevated inflation. If Middle East tensions ease, energy prices could retreat just as quickly. However, a sustained spike would put further pressure on the Fed to raise rates, a headwind for both stocks and bonds.

Market Performance

Market Commentary: Revolutionary Risks and Return

Anthropic, the developer of the Claude family of large language models (LLMs), generated $16.3 billion in revenue during the first half of 2026, nearly fifteen times the year-earlier figure, according to a leaked draft of the prospectus for its upcoming public offering. The document also suggests the company could spend as much as $750 billion on computing capacity in the coming years.

These figures illustrate both the promise and the risks of the AI boom. Demand is growing at an astonishing pace, and Anthropic reportedly generated positive cash flow in the third quarter. At the same time, developing and operating AI systems requires enormous investments in chips, data centers and electricity. Moreover, a good deal of the industry's remarkable revenue growth can be traced to money flowing in a circle, with technology giants investing billions in AI developers that, in turn, spend heavily on chips and computing services supplied by those same investors.

All of this has been a drag on the technology sector stocks, as Mr. Market questions grow about whether AI’s future profits will justify today's lofty valuations. History has repeatedly demonstrated that not every participant in a technological revolution will be rewarded.

In Case You Missed It: Power Hungry

According to the International Energy Agency, by 2027 a single rack of servers in an advanced AI data center could require as much electricity at peak demand as 65 households. A large AI data center can accommodate more than 1,500 such racks, potentially requiring as much power at peak demand as nearly 100,000 households.