AI debt fears meet $117 oil
The rally made it to Wednesday. Then CoreWeave's borrowing costs, a sharp selloff in chip stocks and a widening Middle East war took it back.
What drove the week
AI's money problem moved to the front. CoreWeave, one of the biggest renters of AI computing power, has become the market's test case for AI spending funded with debt. The stock fell about 25% the week before, and some of its bonds now yield around 15–16%, a sign lenders want a lot more to keep funding the buildout. It carries roughly $50 billion in debt, and last quarter its interest bill was bigger than its net loss.
Monday through Wednesday, the market shrugged it off. The S&P 500 rose three straight days to 7,757.17, with Wednesday lifted by strong earnings, SpaceX's guidance among them. After Wednesday's close, Tesla cut its 2026 capital spending plan from $25 billion to $20 billion and slid about 5% after hours.
The money didn't leave stocks. It left AI.
Thursday was the break. The S&P 500 fell 1.2% to 7,663.43, its worst day since July, and the Nasdaq dropped 2.6%. But 337 of the 500 S&P stocks rose and the equal-weight index gained 0.8%. The damage sat in the AI names that had carried the year: Lam Research down nearly 12%, Meta nearly 7%.
Oil and the war. Houthi drones hit near Aramco's Shaybah oilfield and the Dammam airport on Wednesday, and Washington told non-emergency staff to leave Saudi Arabia. Brent traded above $110 Thursday. Friday, Trump said the U.S. could end the war with Iran quickly but weighed letting it "wither."
Bonds and the Fed. The 10-year yield fell about 18 basis points to near 4.95% Thursday, helped by debt worries in France. The Fed meets Wednesday at 3.75–4.00%; futures price about an 8% chance of an October hike and about 84% for one by year-end.
Friday brought no relief. The S&P 500 slipped 0.5% to 7,623.68 and the Dow lost 1.2% as Brent settled at $116.72, its third straight weekly gain. Energy stocks hit a record while airlines fell more than 4% on fuel costs. AT&T and T-Mobile dropped more than 6% on a report that SpaceX wants cell sites for a fourth carrier. Odds of an October Fed hike faded to about 5%.
For the week, the S&P 500 lost 0.5% and the Nasdaq 0.7%, a second straight weekly loss for both. The Dow finished up 0.4%.
What I'm watching
CoreWeave is the one I'm watching. When the company renting out the AI buildout has to pay 15% to borrow, every AI capex number gets questioned, and Tesla trimming its own plan the same week didn't help.
Add oil above $100 and a Fed still leaning toward hikes, and the easy money behind this year's AI rally looks a lot less easy. For 0DTE, that means bigger headline-driven swings, not slow drift.
Still bullish on SpaceX after that guidance. And on tulips, for anyone who thinks this market can't get ahead of itself.
What's next
The Fed, the biggest tech earnings week of the quarter, and inflation data, all in four days.
The first big read on AI spending since CoreWeave and Tesla. Capex guidance is the number to watch.
A hold is expected; the press conference shows whether $100 oil moves the Fed closer to a December hike.
A hot PCE print the day after the Fed would hit bonds and stocks together.
How much $100 oil reaches the majors, and what they say about supply.
A strike on Saudi infrastructure or a shift in the U.S. stance moves oil first and everything else after.