From October 20 to 22, along the banks of Shanghai's Huangpu River, the 2026 Sustainable Global Leaders Conference returns once again. Nobel Prize and Turing Award winners will take the stage to discuss the future and trends of technology, and the internet-famous professors who "rescue" people from anxiety and the era of involution — Macfarlane and Xiang Biao — will hold a live dialogue!
Seats are limited, so act fast. Let us gather for a sustainable appointment! [Click to register] The fear index VIX surged more than 20% on Friday. This week, CoreWeave triggered artificial intelligence-related concerns that kept tech stocks under pressure, with the market worried that heavily indebted AI infrastructure companies may not be able to turn a profit in time to repay their debts, especially as borrowing costs are expected to rise, while soaring oil prices also frightened investors. The Cboe Volatility Index VIX, which measures market volatility, jumped 21.4%. Next week, turbulence in the chip sector may be difficult to repair in the short term. The outside world will look for more clues about AI prospects from Meta's earnings report, while the Middle East situation and the trajectory of U.S. Treasury yields will also continue to be important factors affecting market direction.
The Fed may stay put in October
This week, both U.S. inflation readings came in above expectations: the September unadjusted Consumer Price Index (CPI) annual rate was 3.7%, higher than August's 3.4% and the market forecast of 3.6%; it rose 0.6% month over month, the largest increase in five months. Core CPI rose 2.6% year over year, also above expectations and the previous reading. The September Producer Price Index (PPI) rose 6.3% year over year, far above the expected 5.3% and the highest since December 2022; it rose 1.3% month over month, more than double the market expectation of 0.6% and the largest monthly gain since March 2022. There are signs that inflationary pressure is spreading: energy was the main driver, but after excluding food, energy and trade services, the monthly rates of core CPI and PPI accelerated, indicating that price increases are not concentrated only in energy and have spread to a wider range. Bob Schwartz, senior economist at Oxford Economics, said in an interview with Yicai that gasoline and diesel are the biggest upside pressure points, because tight refinery capacity and reduced shipments have kept refined product prices elevated. As the broader effects of higher energy prices spread, rising prices for food and other items may become a trend. After the data was released, market expectations for an October rate hike briefly heated up, but Fed Chair Warsh clearly refused to prejudge interest rate decisions during the International Monetary Fund (IMF) annual meetings, taking a "dovish blank" stance, and the probability of an October hike instead fell from more than 25% to about 15%. However, the probability of at least one rate hike before the end of the year remains as high as 91%. Next week, Fed officials enter the quiet period before this month's policy meeting, and the economic calendar contains only a few housing and business confidence data releases. What is certain is that after the upside inflation surprise, monetary policymakers will have a lot to consider. Long-term U.S. Treasury yields rose and then fell back, retreating nearly 10 basis points from their midweek highs. Deutsche Bank analysis said that despite last week's strong inflation data, the Federal Reserve will remain unchanged at its October meeting in order to gather more information about underlying trends and monitor financial conditions after large global interest rate swings began to affect risk assets. Barclays also leaned toward the Fed staying put this month in its latest research report, and then choosing to raise rates by 25 basis points each in December and next January.
Market turmoil may not be over yet
This week, the Nasdaq index plunged 4.5%, ending four consecutive weeks of gains and marking its worst weekly performance since June, while the S&P 500 posted its largest one-week drop in a month. Dow Jones market statistics showed that only 4 of the S&P 500's 11 sectors declined, but the losses were enough to outweigh the gains in the other 7 sectors. The technology sector fell 6.4%, the consumer discretionary sector fell 1.9%, the communication services sector fell 1.6%, and the industrials sector fell 0.9%. As concerns about CoreWeave's debt and credit risk intensified, outside worries about AI financing also heated up, and CoreWeave fell 25% this week. Capital rotation accelerated, flowing into other sectors for safety. Consumer staples and energy each rose 5%, followed by health care up 3.4%, materials up 2.5%, and utilities up 2%. Financials and real estate also edged higher. It is worth noting that although the S&P 500 is still up about 12% this year, most of the gain has come from AI-related tech stocks, and the index's median constituent has risen only about 6% year to date. About 185 S&P 500 stocks have fallen in 2026. On October 6, the S&P 500 and Nasdaq Composite hit record closing highs, but only a handful of tech giants drove the rally, which indicates underlying weakness in the market. Many analysts worry that stocks may be due for a pullback, because most S&P 500 constituents have been hovering far below their historical highs. "The market is somewhat worried," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. "Especially high oil prices tend to depress stock price-to-earnings ratios, so I think investors want to stay cautious rather than take on more risk." Bank of America star strategist Michael Hartnett believes the summer's AI-driven optimistic rally is over and that investors should avoid risk over the next 3 to 4 weeks. The core concerns are rising real interest rates, sticky inflation, and even the possibility that the Fed may raise rates in October, which would be most damaging to highly valued tech growth stocks; at the same time, the U.S. midterm elections also bring uncertainty. He recommends withdrawing from AI tech stocks and shifting toward bonds and small-cap defensive assets.
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