Nasdaq fell 4.5%. Now Meta, Tesla.

Good morning. The Nasdaq fell 2.1% Friday to cap a 4.5% weekly drop, its worst week since June, as investors kept selling AI stocks and US crude settled above $100 a barrel (CNBC; Reuters). Overnight, Nasdaq-100 futures are up 1.3%, Tokyo's Nikkei closed down 0.6%, and China said its economy grew 4.5% last quarter, a touch faster than expected.

Stocks, VIX and yields are Friday's close. Futures, oil and gold as of ~3:45 AM ET Monday vs. Friday's settle. Crypto as of ~3:56 AM ET Monday, vs. its 24-hour open. Nikkei and Kospi are Monday's closes. Stoxx 600 is Monday's session, live as of ~3:40 AM ET.

One-line read: Futures are still green after Friday's AI selloff, but Europe opened lower and oil has slipped below $100.

The S&P 500 fell 1.09% to 7,659.44 Friday and the Nasdaq Composite dropped 2.15% to 26,140.03, with both closing below their 50-day moving averages (CNBC). The Dow slipped 0.34% to 52,002.41. The selling centered on AI. CoreWeave, the debt-funded data-center operator, fell 11.9% to $61.39, bringing its five-day loss to about 25%, and its bonds sold off enough to push their yields above 15% (Reuters; CNBC). The PHLX Semiconductor Index fell 3.8%, its eighth straight decline and longest losing streak since 2008 (Reuters), as AMD lost 6.0%, Micron 5.6% and Broadcom 4.5% (CNBC). Meta fell 3.7%; Apple, up 0.4%, was the only Magnificent Seven stock to rise (CNBC). Reuters also reported that some Anthropic investors are weighing a lower valuation for the AI company's planned IPO, citing people familiar with the matter.

The numbers: For the week, the S&P 500 fell 1.95% and the Nasdaq 4.48%, their deepest weekly declines since June, while the Dow rose 0.67% (Reuters). Six of 11 S&P 500 sectors rose Friday, led by energy, up 2.47%, and utilities, up 1.4% (Reuters). The equal-weighted S&P 500 fell only 0.40% (CNBC), and falling stocks roughly matched rising ones (Reuters). The VIX, Wall Street's fear gauge, jumped 3.53 points to 19.99, its highest close since July 29, after topping 22 during the day for the first time in four months (Cboe; CNBC; FRED). Volume was heavy at 18.6 billion shares vs. a 20-day average of 17.7 billion (Reuters).

Why it matters: The S&P 500 is still up about 12% this year, but the median member is up only about 6%, and about 185 of its stocks are down (Reuters). So most of an S&P 500 fund's 2026 gain came from the same AI names that had the bad week. Goldman Sachs traders wrote Friday that "AI Capex has likely peaked and financing, sustainability, and returns on capital have become the debate" (CNBC). The index is 2.0% below its Oct. 6 record close (FRED). A bad week, not yet a bad year.

What to watch: Nasdaq-100 futures are up 1.3% as of ~3:45 AM ET (CNBC). The first big test of AI spending comes Wednesday, when Meta and Tesla report.

About 70 S&P 500 companies report this week (CNBC). Meta reports after Wednesday's close with a call at 4:30 PM ET (Meta), and Tesla reports after the close the same day with its webcast at 5:30 PM ET (Tesla). Chip-equipment maker Lam Research and Texas Instruments also report Wednesday, and SpaceX reports this week too (Reuters). Netflix reports after Tuesday's close and General Motors before Tuesday's open (CNBC). Today, regional banks start things off: Fifth Third reports before the open, with its call at 9:00 AM ET (Fifth Third), and Zions after the close, with its call at 5:30 PM ET (Zions). So far, 85% of the roughly 45 S&P 500 companies that have reported beat earnings estimates (FactSet via CNBC), and analysts expect third-quarter S&P 500 earnings to rise more than 30% (LSEG via Reuters). Meta is one of five AI "hyperscalers" expected to spend about $1.2 trillion combined on capital projects next year (Goldman Sachs via Reuters). "One of the most important takeaways of earnings season is whether or not the profitability of the hyperscalers can grow faster than the pace of their capex," BNY Wealth's Kevin Shea told Reuters.

Why it matters: Meta's spending is revenue for chipmakers and server makers, and all of them sit in an S&P 500 fund. Meta's budget is the rest of the AI trade's sales forecast.

US crude (WTI) rose 3.5% Friday to settle at $101.41 a barrel, and Brent rose 3.7% to $109.86, as Iran escalated attacks in the Strait of Hormuz and Ukraine vowed to keep striking Russian refineries (CNBC). Two tankers were attacked off Saudi Arabia on Friday, Ukrainian drones set off fires at an oil terminal in St. Petersburg on Sunday, and a senior Iranian security official warned of a "far more devastating" response to any new US-Israeli strikes (CNBC). Oil has slipped further overnight and is below $100: WTI is at $99.55, down 1.8%, and Brent at $107.07, down 2.5%, as of ~3:45 AM ET (CNBC). Prices are spreading: US import prices rose 1.1% in September and 8.1% from a year earlier, the biggest annual gain since July 2022 (BLS), while industrial production rose 0.7% (Federal Reserve). The 10-year Treasury yield ended the week at 5.09%, down 15 bp (US Treasury). Fed officials are now in their quiet period before the Oct. 28 decision (Bloomberg). Fed funds futures put an 85% chance on no change at the Oct. 27–28 meeting, and an 89% chance the target is higher by the Dec. 9 meeting (CME FedWatch, as of ~3:45 AM ET). Barclays expects quarter-point hikes in December and January (Reuters).

Why it matters: Regular gasoline averaged $4.33 a gallon in the week of Oct. 12 (EIA via FRED). Expensive oil → stickier inflation → a Fed that keeps hiking, which sets what your savings account pays and what new loans cost.

The NAHB/Wells Fargo Housing Market Index for October comes out at 10:00 AM ET (NAHB). In September it fell three points to 32, a 12-month low, and 38% of builders cut prices (NAHB; Reuters). The average 30-year mortgage rate was 7.40% last week, the highest since November 2023 (Freddie Mac via FRED). September housing starts follow Tuesday at 8:30 AM ET (Census Bureau).

Why it matters: On a $400,000 loan, 7.40% works out to about $2,770 a month in principal and interest, roughly $300 more than at last October's 6.27% (our math, Freddie Mac rates). That gap is the housing market's whole problem in one number.

The Nasdaq had its worst week since June. For context, last week's 4.5% drop ended a four-week winning streak, and the index is still up 12.5% in 2026. Notice the June bars: two weeks about this bad came three weeks apart, and the Nasdaq was still up for the year after each (10.6% and 8.8%).

Source: FRED (NASDAQCOM) through Oct. 15; Oct. 16 close via CNBC and Reuters. Weekly change = last close of each week vs. the prior week's last close.

The VIX is Cboe's index of how much traders expect the S&P 500 to swing over the next 30 days, worked out from S&P 500 option prices (Cboe). It's quoted as an annualized percentage. A reading of 20 implies yearly swings of about 20%, or roughly 1.3% a day (our math: 20 divided by the square root of 252 trading days). Think of options as portfolio insurance and the VIX as the premium. Friday's 19.99 sounds alarming but sits close to the VIX's average of 19.4 since 1990 (FRED). What changed is the speed: it was 14.84 on Oct. 9 (FRED). Premiums went from cheap to normal in a week.

That's the desk. See you tomorrow at 6 AM ET.

— The Overnight Desk Team

Note: The Overnight Desk Team may hold positions in assets discussed. Nothing here is investment advice. · Sponsor: No one paid for any mention in this issue.