Nasdaq falls 4.5% in a week as AI stocks slide and yields top 5%
On 16 October 2026 the Nasdaq fell 2.1% to 26,140 and lost 4.5% on the week, while the Dow posted a second weekly gain. Chips, AI software and CoreWeave led the decline.
US technology stocks ended a difficult week on Friday 16 October 2026. The Nasdaq Composite fell 2.1% to 26,140.03 and lost about 4.5% on the week, ending a four-week winning streak. The S&P 500 fell 1.1% to 7,659.44, down about 2% on the week, while the Dow Jones Industrial Average slipped 0.3% to 52,002.41 but still recorded its second consecutive weekly gain.
Semiconductor and AI-related shares led the decline. CoreWeave fell about 12%, its second large drop in three days, on concerns about its debt. The iShares Semiconductor ETF lost 4% on the day, after an 8% fall over the week to Thursday, and memory makers including Micron, Western Digital and Seagate also fell. Meta lost nearly 4%; Apple was the only one of the largest technology companies to close higher.
Two forces weighed on valuations. Hotter-than-expected consumer and producer price data revived expectations of further Federal Reserve rate increases: traders priced a 17% chance of a hike at the late-October meeting and 89% by December. The 10-year Treasury yield traded above 5.09%, after touching 5.33% following Wednesday's inflation report.
Energy shares rose with oil. West Texas Intermediate gained 3.4% to 101.35 dollars a barrel and Brent 3.5% to 109.55 dollars, as risks in the Middle East outweighed efforts to raise supply.
Why it matters: when risk-free yields rise above 5%, investors demand more from companies whose profits lie far in the future. That is why the most highly valued growth stocks usually fall hardest when rates and yields move up.