Friday, October 9, 2026
Nasdaq Drops 1.25% as AI Doubts and Higher Oil Hit Tech While the Dow Edges Up
Key Indicators
S&P 500
7,765.36
-0.47% (down)Nasdaq Composite
27,193.34
-1.25% (down)Dow Jones Industrial Average
51,231.64
+0.10% (up)VIX
15.41
+2.19% (up)WTI Crude Oil
$91.07
+3.16% (up)Market Recap
Tech Slides, Nasdaq Falls 1.25% While the Dow Gains
US stocks finished mixed Thursday as technology sold off. The S&P 500 fell 0.47% to 7,765.36, the Nasdaq Composite dropped 1.25% to 27,193.34, and the Dow Jones Industrial Average rose 0.10% to 51,231.64. It was the second straight decline for the S&P 500 and Nasdaq. The Russell 2000 was essentially flat, up 0.03%. The technology sector (XLK) fell about 2.1%, while energy (XLE) rose about 2.3% and consumer staples (XLP) gained about 2%, a defensive rotation. Reports that OpenAI's annualized revenue fell short of what had been signaled fed fresh doubts about the AI trade. Markets are open today.
AI Names Lead the Decline as Rates and Oil Weigh
Oracle fell more than 5%, Nvidia lost nearly 3% and AMD almost 4% after the OpenAI revenue reports. Rising Treasury yields, with the 10-year briefly crossing 5.35% during the session, and crude oil trading above $102 a barrel in some reports pressured valuations amid tensions around the Strait of Hormuz. Goldman Sachs also warned about future stock returns. WTI crude settled at about $91.07, up 3.16%, and the VIX rose 2.19% to 15.41.
Single-Stock Movers: Chipotle, Starbucks, Nike, Best Buy
Chipotle rose about 4.4% on reports of a potential takeover by Starbucks, which fell more than 3%. Nike dropped more than 2% after giving a cautious fiscal 2027 outlook. Best Buy climbed 5%. Universal Display was downgraded on an expected decline in smartphone demand.
Concept of the Day
Equity Risk Premium
The equity risk premium (ERP) is the extra return investors demand for holding stocks instead of a risk-free asset such as a Treasury bond. It cannot be observed directly. A common estimate is the earnings yield (earnings divided by price) or the expected return from a dividend discount model, minus the risk-free rate, usually the 10-year Treasury yield. When Treasury yields rise and stock prices do not fall, the premium shrinks, meaning investors accept less compensation for taking equity risk. A thin premium leaves valuations vulnerable: either stock prices must fall, earnings must grow faster, or yields must come down to restore the cushion. This is why rising yields often hit the most expensive, longest-duration stocks first. The ERP is a relative-value measure, not a timing tool. Premiums can stay thin for long stretches, and the estimate depends heavily on the earnings and growth assumptions you use.
Why it matters
The 10-year yield briefly crossed 5.35% on Thursday while the Nasdaq fell 1.25% and Goldman Sachs warned about future stock returns. With a risk-free yield above 5%, equities offer far less cushion over Treasuries than they did when yields were lower, so any disappointment in the AI story, such as the OpenAI revenue reports that hit Oracle, Nvidia and AMD, can be punished quickly. That makes the Oct. 14 CPI report and the path of yields central to how much premium investors will demand.
What to Watch
Wed, Oct 14
Consumer Price Index (September)
It is the next major inflation reading, released at 8:30am ET, with the Cleveland Fed nowcast at 3.6% against 3.4% for August.
Thu, Oct 15
Producer Price Index and Retail Sales (September)
Wholesale inflation and consumer spending add to the inflation and growth picture a day after CPI.
Wed, Oct 28
FOMC Rate Decision
The Fed announces its decision at 2:00pm ET after its Oct. 27-28 meeting.