Stocks rebound from AI sell-off as earnings season begins

Stock market futures indicated a rebound on Monday, October 19, 2026, as investors moved to buy the dip in artificial intelligence-related shares following a sharp sell-off the previous week. Futures tied to the Nasdaq 100 rose 1%, while S&P 500 futures gained 0.4%. In contrast, Dow Jones Industrial Average futures fell 135 points, or 0.3%.

AI Sector Rebound

The recovery followed a week in which the S&P 500 lost nearly 2%, its biggest weekly decline since late June, and the Nasdaq tumbled 4.5%, ending a four-week winning streak. The sell-off was driven by concerns over the sustainability of AI spending and specific financial worries regarding CoreWeave, a cloud computing company whose shares plunged more than 25% last week due to debt concerns.

On Monday, CoreWeave shares gained 6% in premarket trading. Intel advanced more than 3% after JPMorgan analysts upgraded their rating on the chipmaker. Advanced Micro Devices and Micron Technology also rose 3% each.

The previous week's volatility was partly triggered by reports that Anthropic's third-quarter revenue totaled $16.8 billion, up from $11.6 billion in the second quarter. While this represented growth, it raised flags among investors about the pace of the AI build-out. Goldman Sachs traders noted that "AI Credit Spreads and hyperscalers specifically are at the widest levels of the year," adding that "AI Capex has likely peaked and financing, sustainability, and returns on capital have become the debate."

Earnings and Economic Indicators

Investors are looking to upcoming earnings reports from major companies, including Meta Platforms and Tesla, to help stabilize the market. JPMorgan strategist Mislav Matejka stated that stabilizing bond yields would be key to equities moving higher, noting that lower yields reduce pressure on AI funding and consumer finances.

Treasury yields moved lower on Monday, with the 10-year U.S. Treasury yield falling to 5.0854%. This movement occurred as investors weighed domestic inflation data against geopolitical developments.

Global Markets and Geopolitics

European markets opened lower, with the Stoxx 600 falling 0.82%. France's CAC 40 led losses, dropping 1.35%, amid nationwide demonstrations over high living costs that turned violent over the weekend. The U.K.'s FTSE 100 dipped 0.94%, and Germany's DAX lost 1.1%.

In Asia, markets were mixed. South Korea's Kospi rose 1.76%, and Australia's S&P/ASX 200 added 0.44%. Japan's Nikkei 225 closed 0.62% lower. China's CSI 300 ended flat at 4,174.53. China reported third-quarter economic growth of 4.5%, beating expectations of 4.4%, driven by robust exports.

Oil prices traded slightly lower despite geopolitical tensions. Brent crude fell more than 1% to around $108 per barrel, and West Texas Intermediate was marginally lower at around $101. This came after Ukraine attacked an oil terminal in St. Petersburg, Russia, and attacks on commercial ships in the Persian Gulf continued.

Why it matters

The market's reaction to AI-related news highlights the sector's significant influence on broader equity indices. As investors shift focus from growth potential to financial sustainability and return on capital, the upcoming earnings season will be critical in determining whether the AI trade can maintain its momentum or if a broader correction is underway. Additionally, geopolitical instability in Europe and the Middle East continues to impact energy prices and global market sentiment.

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Sources

• cnbc.com: Stock market today: Live updates
• ft.com: Subscribe to read

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.