AI Stocks Slide as Debt Fears Outweigh Strong Chipmaker Earnings

Stocks are falling as concerns about artificial intelligence debt collide with another hotter-than-expected inflation report. The tension is that Treasury yields are dropping because investors fear economic weakness, rather than because inflation is easing. The S&P 500 still has a possible path toward 8,000, but technology remains under heavier pressure. Bitcoin is also testing a critical boundary at $81,000.

In One Minute

The market is separating, with artificial intelligence stocks taking the hardest hit while buying outside technology helps support the S&P 500. Producer inflation is accelerating, yet falling Treasury yields point to growing concerns about defaults and recession. The biggest risk is that financing problems turn into weaker spending and earnings. I’m watching whether the 10-year yield stabilizes near 5%, whether technology can find support, and whether Bitcoin recovers $81,000.

The Context

September producer prices rose 6.3% from a year earlier, versus a 5.3% forecast and a prior reading of 5.6%. Monthly producer inflation reached 1.3%, compared with expectations of 0.6% and a previous 0.5%. That puts annual inflation one full percentage point above expectations and the monthly increase at more than double the forecast.

Core producer inflation, which excludes food and energy, reached 5.0% annually, versus a 4.4% forecast and a previous 4.8%. Monthly core inflation was 0.7%, compared with expectations of 0.3% and a prior 0.2%. Oil alone cannot explain those numbers because core inflation removes energy. Coming after hotter-than-expected consumer inflation, this leaves the market facing persistent price pressure alongside increasing financial stress.

Key Developments

The S&P 500 Index (SPX) fell about 1.1% yesterday, while the Nasdaq lost about 2%. S&P 500 futures continued lower overnight, although the weakness was less severe than it could have been. The Nasdaq 100 was pointing toward an opening decline of about 1.2%, versus roughly a third of a percent for the S&P 500.

The difference is that money is rotating into consumer staples, cyclical businesses, and other companies outside technology. That buying is helping hold up the S&P 500 even as its technology stocks decline. The Invesco QQQ Trust (QQQ) chart shows persistent selling and limited recovery near the lows, reinforcing the pressure on technology.

The S&P 500 was still less than 2% below its record before the additional morning weakness, which would put it approximately 2.1% below the high. Its daily chart shows a marked neutral zone beneath price, with rising support farther below. I still see a decent chance of reaching 8,000 if a technology bounce combines with continued strength elsewhere. That keeps me more constructive on the broader index than on the technology-concentrated Nasdaq.

The 10-year yield is approaching 5% after daily and weekly long upper wicks signaled that the recent rise was losing strength. Those candles show yields pushing higher but failing to hold those levels. The move toward 5% has taken roughly two days, much faster than I expected.

My expectation is for a possible bounce near 5%, followed by another decline. The next larger target is 4.7% by year-end, around an earlier pivot high and an area where yields spent time before breaking higher. Returning to that area would be a retracement toward previous resistance that could now offer support.

The concern is why yields are falling while inflation is rising. Investors are buying bonds for protection as fears grow that defaults could damage the economy and push it toward recession. Lower yields under those conditions do not necessarily help stocks because weaker growth also threatens earnings.

South Korea

The KOSPI fell 7.57% in the latest session and more than 20% over seven trading days. Selling was severe enough to interrupt trading in a market heavily exposed to artificial intelligence suppliers such as SK hynix and Samsung. The daily chart is approaching a rising support line connecting earlier lows.

That puts a technical bounce within reach, but I would separate a rebound from a lasting recovery. My broader expectation is for a bounce, another test of the area, and eventually a break lower. The underlying view remains that the artificial intelligence trade has already topped.

CoreWeave (CRWV) fell 15.5% yesterday, with credit concerns becoming central to the selloff. Credit default swap protection costs around 10% or more annually, while the 2032 bond yield is around 15%. The credit snapshot also shows implied default odds over five years above 50%, reflecting substantial market concern about repayment.

Think of credit protection as insurance against specified debt problems: a higher premium means that protection has become more expensive. That matters for businesses relying on borrowing and new capital to keep expanding. On the stock chart, $59.50 is the immediate potential bounce level, with price approaching lower support beneath a descending resistance line.

Taiwan Semiconductor Manufacturing Company Ltd. (TSM) delivered strong earnings, but its shares were still down about 3.7%. ASML also fell after its results yesterday, showing that good earnings are not enough to overcome concerns about the wider artificial intelligence trade. Taiwan Semiconductor’s shorter-term chart shows sustained selling with little recovery between declines.

Micron Technology, Inc. (MU) began weakening after its summer earnings release, when an initial jump reversed into a sharp decline despite enthusiasm about its low price-to-earnings ratio. The recovery that followed formed a bear flag, a temporary rebound within a larger decline, before breaking lower. It has also broken an important rising support line and continued falling.

With shares around $872, there is some support near $830. The more important area is $730 to $740, including a gap fill and the earlier pivot low at $740. I would expect a meaningful bounce there, followed eventually by further weakness.

My longer-term target remains $460, potentially by early 2027 or mid 2027. That would return the stock toward an earlier breakout area. There may be swing trading opportunities along the way, but I would wait until at least $460 before considering a longer-term investment.

Nebius Group N.V. (NBIS) is also falling sharply, with a major gap fill at $148. That level is still some distance below price, but these stocks are moving quickly enough that it could be reached today or tomorrow. That is the next major area I’m watching.

The concentration problem extends across technology, with NVIDIA’s approximately $5 trillion market value illustrating the scale of the largest positions. More than 50% of the Nasdaq exposure is tied to artificial intelligence in this outlook, including companies investing heavily in data centers. That concentration is why my view remains more cautious on the Nasdaq than on the broader S&P 500.

Silver fell more than 6% yesterday and returned to recent lows around $55 an ounce. It is bouncing from approximately $55 to $55.50, but it has already broken below its wedge and confirmed that breakdown. A wedge is a narrowing price pattern, and the follow-through below its lower boundary makes the weakness more significant.

The broken support line now becomes major resistance, where a recovery could be rejected. I’m watching whether the bounce develops into a bear flag before another decline toward $50 to $48. I bought the recent support test for a quick technical bounce, and that trade is in profit. For longer-term accumulation, I’m waiting for $50 or below.

Copper is testing the lower boundary of a rising wedge after repeatedly failing at its upper resistance line. If it closes below support and confirms the break, I expect a sharp decline toward $630. The bearish case combines weaker artificial intelligence spending, potential defaults, and pressure on the broader economy.

Data centers use substantial copper, so slower construction would weigh on demand. Rates above 5% for an extended period, persistent inflation, and oil averaging about $95 a barrel this year add to the economic strain. That leaves me strongly bearish on copper near these elevated levels.

Oil is fractionally higher, with supply restrictions involving the strait and the Red Sea continuing to support prices after months around $90 to $100 a barrel. I am not short right now, but I would consider starting around $100 to $101, near the gap fill. If price reaches the upper resistance line, I would consider adding there.

The key downside level is $88.75, and I eventually expect a break toward the lower descending trend line. If transportation restrictions ease, oil could fall well below $70 as economic weakness becomes more important. A recession could bring the roughly $55 levels from early 2025 and early 2026 back into play, with a price in the $50s possible by early 2027. That larger decline depends on a deal involving Iran or another development that eases the supply constraints.

Gold is benefiting from demand for protection, lower yields, and a slightly weaker dollar. It has closed below rising support more than once without confirming a lasting breakdown, and the latest recovery is again challenging that bearish signal. Holding the line keeps the possibility of a stronger rebound alive.

The chart also has descending resistance overhead, which remains an obstacle during a recovery. If gold breaks support and confirms, the downside target is $3,500. Until then, its ability to recover support keeps the bullish possibility open.

Natural gas surged late yesterday and regained its trend line after struggling earlier in the session. Today brought an initial rise followed by a retreat, and the larger breakout remains unconfirmed. The next catalyst is the inventory report at 10:30 AM ET.

I remain favorable toward a breakout and am still long after taking profits on half the position. The remaining half is being held for a larger move. Natural gas rose earlier in the year but has made little progress for more than six months, and the seasonal period adds to the interest in this setup.

Walmart Inc. (WMT) is attracting defensive buying, but the recent move looks extended in the short term. Its chart shows a recovery through descending resistance, and I’m watching around $120 for a potential short trade and pullback. Households may turn to Walmart for lower prices, but a weaker economy can eventually force even those shoppers to reduce spending. That makes strong rallies into key resistance potential trading opportunities rather than automatic buying opportunities.

Bitcoin (BTC) is below $81,000 and trading around $80,390, although the session is still developing. The chart marks $81,000 as the breakdown level and $87,200 as the upper breakout level. The immediate question is whether price can recover $81,000 and hold it.

The pattern has weakened from what initially looked like a bull flag. An attempted breakout failed, price dropped sharply, and a bear flag formed as Bitcoin repeatedly pressed against support. If it remains below $81,000, the next downside level is $75,500.

I am neither long nor short Bitcoin right now. At $75,500, I would consider a small position for a swing trade. The larger buying opportunity remains around $67,000, which is a separate setup from trading a nearer term bounce.

Why It Matters

The central problem is the combination of stubborn inflation and growing concern about repayment. When financing becomes more expensive and investors question whether borrowers can pay their debts, expansion plans become harder to sustain. That connects the artificial intelligence selloff with pressure on copper and concern about the broader economy.

Falling yields offer little comfort if they reflect recession fears rather than improving inflation. The S&P 500 has held up better because money is finding other places to go, while gold is benefiting from demand for protection. Even defensive businesses such as Walmart remain exposed if households eventually spend less.

Key Details

Bull Case

The S&P 500 can still reach 8,000 if strength outside technology continues and a Nasdaq bounce adds support. The KOSPI is nearing a trend line that could produce a technical rebound, while CoreWeave and Micron have identifiable bounce areas below. Those are potential trading recoveries, with the broader concerns still unresolved.

Gold can recover more strongly if rising support holds and the breakdown remains unconfirmed. Natural gas still has a possible breakout after regaining its trend line, and the remaining position is being held for that opportunity. Silver’s immediate support has already produced a profitable technical bounce, even though the longer-term buying area remains lower.

Bear Case

The larger risk is that artificial intelligence credit stress develops into defaults, reduced investment, and weaker earnings. Micron could bounce near $730 to $740 and still eventually reach $460, while the KOSPI could rebound before breaking lower. Walmart’s defensive appeal would not prevent pressure if household spending weakens.

Silver’s confirmed wedge breakdown leaves $50 to $48 in view, while copper needs confirmation below support to activate the sharper downside setup. Gold would face $3,500 if its own support break confirms, and oil could decline substantially if supply restrictions ease alongside economic weakness. Bitcoin remaining below $81,000 leaves $75,500 exposed.

What to Watch Next

The scheduled catalyst is natural gas inventories at 10:30 AM ET, alongside the question of whether its breakout confirms. I’m also watching the 10-year yield near 5%, copper’s close relative to wedge support, and gold’s ability to avoid confirming a breakdown. In oil, $88.75 remains the key downside boundary.

For stocks, the immediate tests include CoreWeave at $59.50, Micron near $830 and then $730 to $740, Nebius at $148, and Walmart around $120. The KOSPI is approaching its rising support line, where a bounce may develop. For Bitcoin, the immediate test remains whether it can reclaim and hold $81,000.

Bottom Line

Falling yields are not reassuring while inflation stays hot and credit concerns intensify. The S&P 500 still has a path higher, but technology needs to stabilize without financing problems spreading into the wider economy. Bitcoin’s $81,000 boundary and the major commodity support tests will help separate temporary rebounds from lasting recoveries. I’m waiting for confirmation and keeping the price discipline intact.