AI Sell-Off Hits Nasdaq Ahead of UK Inflation

Week of 19 October 2026

AI stocks took a beating this week. Dell dropped 17% in two days and CoreWeave fell 15% on Wednesday as worries over the debt funding the AI boom spread through chipmakers and data-centre names, leaving the Nasdaq 100 heading for a weekly loss of around 3%.

The FTSE 100 benefited from the rotation, climbing to a seven-week high after UK GDP beat forecasts, while hotter US inflation briefly revived bets on an October Fed hike.

UK inflation on Wednesday is the main event in the coming week, the last CPI reading before the Bank of England's 5 November decision, with jobs data a day earlier. Netflix, Tesla and Meta lead US earnings, Barclays and RELX report on Thursday, and Friday brings UK retail sales and flash PMIs.

Week in Review

UK growth beat forecasts.

GDP rose 0.1% in August, against expectations for a 0.1% contraction, and grew 0.7% over the three months to August. Sterling gained around 0.5% on Thursday, lifting GBP/USD to around 1.33, and the UK 10-year gilt yield eased to around 5.35% from 5.48% last week, while the UK 30-year gilt yield dropped back below 5.9%. Chancellor John Healey said the 28 October Budget would focus on economic resilience and fiscal discipline, and the IMF said the UK does not need to speed up its deficit reduction.

The FTSE 100 hit a seven-week high.

The FTSE 100 closed at 10,840 on Thursday, its highest since 26 August, and was up around 2.5% on the week by Friday as its low tech exposure kept it clear of the AI sell-off. Banks led a 1% rise on Monday, with HSBC up around 2%. BP gained almost 4% on Tuesday after reaching its debt-reduction target a year early, despite flagging up to $4.5 billion of impairments. AstraZeneca, GSK and Unilever rallied on Thursday as investors moved into defensive stocks, and Experian rose 2.9% as software shares recovered. Miners lagged, with Antofagasta down more than 4% on Thursday after lower third-quarter copper output and Rio Tinto also weaker.

Debt fears hit the AI trade.

CoreWeave's slump on Wednesday spread worries about the borrowing behind the AI build-out, and Japan's Nikkei 225 fell almost 5% on Thursday as Samsung and SK Hynix dropped more than 8%. Dell fell 11% on Wednesday and 6.8% on Thursday after a Barclays downgrade questioned how much AI is lifting enterprise spending, with Hewlett Packard Enterprise down 7% on Thursday. TSMC beat forecasts with third-quarter revenue of $46.4 billion and a 69% jump in profit, but its shares still fell around 2%. Money rotated into beaten-down consumer names, lifting Nike more than 5% on Thursday from multi-year lows, and the Dow gained 1.1% that day.

Bank earnings were mixed.

Goldman Sachs posted $18.7 billion of revenue, its second-highest ever, as equities trading revenue jumped 72%, and Morgan Stanley also beat on trading. JPMorgan made a rare profit miss, with earnings of $5.57 a share against $5.90 expected. Bank of America fell around 5% on Wednesday after missing forecasts and being hit with a $1.2 billion penalty over anti-money-laundering failures. Citigroup posted its best third-quarter revenue in a decade, while Wells Fargo missed on revenue.

US inflation ran hotter.

Headline CPI rose to 3.7% in September from 3.4%, above the 3.6% forecast, as petrol prices jumped 9.1%, and core inflation climbed to 2.6%. Producer prices surged 1.3% on the month, more than double expectations. Retail sales rose 0.8% in September, well ahead of the 0.3% forecast, although much of the gain came from higher fuel bills and the control group, which feeds into GDP, rose only 0.1%. Odds of an October Fed hike jumped from around 20% to above 40% after the CPI data but faded later in the week, and Fed Chair Kevin Warsh gave no signal on Friday, saying: "I don't prejudge meetings." The US 10-year Treasury yield fell to around 5.10% from 5.25% as investors sought safety from the tech sell-off.

Biggest Market Movers

• UK100 – rose around 2.5% to a seven-week high

• NDQ100 – headed for a weekly loss of around 3%

• USOIL – gained around 6%

• XAUUSD – rebounded from a $4,073 low

• GBPUSD – rose to around 1.33

• Dell (DELL) – fell 17% in two days

• CoreWeave (CRWV) – dropped 15% on Wednesday

• Nike (NKE) – jumped more than 5% on Thursday

• TSMC (TSM) – fell despite beating forecasts

• BP (BP) – gained almost 4% on Tuesday

• Bank of America (BAC) – fell around 5% on Wednesday

Top Events in the Week Ahead

UK inflation and jobs data land a week before the Budget and just over two weeks before the Bank of England's November decision, while Tesla and Meta test the AI trade after this week's sell-off.

UK Inflation and Jobs

Wednesday's CPI is the last inflation reading before the Bank of England decides.

Inflation rose to 3.1% in August from 2.9%, driven by motor fuel, and the Bank expects it to climb towards 3.75% by the end of the year as energy costs feed through. Tuesday's labour market figures come first, after unemployment hit 4.9% and wage growth including bonuses slowed to 3.9% in the previous release. With Bailey seeing little sign of second-round effects so far, any pick-up in services inflation or pay would strengthen the hawks' case.

Tesla, Meta and Netflix

Big Tech earnings arrive just as confidence in the AI trade wobbles.

Netflix reports on Tuesday, followed by Tesla, Meta, IBM, Lam Research and Texas Instruments on Wednesday. After this week's slide in Dell, CoreWeave and chipmakers, investors want to hear whether Meta is sticking with its AI spending plans and how it is paying for them, while Lam Research gives a read on demand for chipmaking equipment. S&P 500 earnings are forecast to grow around 30% in the third quarter, with AI-related tech doing most of the lifting.

UK Retail Sales and Flash PMIs

Friday shows how UK consumers and businesses are coping with higher energy costs.

Retail sales rose 0.5% in August, and September's figures arrive alongside October's flash PMIs, after UK services came in at 52.1 and manufacturing at 51.9 last month. Eurozone and US flash PMIs follow later on Friday.

Other Events and Earnings

China publishes third-quarter GDP on Monday, forecast at 4.4%, alongside September activity data, and Canada releases CPI. Germany's ZEW survey follow on Tuesday and eurozone consumer confidence on Thursday, with Japanese CPI and the final University of Michigan sentiment reading on Friday. Fed officials are in their blackout period ahead of the 27–28 October meeting.

On earnings, Thursday is the key day in the UK, with Barclays' third-quarter results and RELX's nine-month trading update, while Anglo American and Fresnillo publish third-quarter production figures on Tuesday. In the US, other earnings releases to watch include GE Aerospace, General Motors, RTX and 3M report on Tuesday morning, with Intuitive Surgical and Capital One after the close. AT&T, Abbott and NextEra report on Wednesday, Lockheed Martin, Comcast and American Airlines on Thursday, and American Express and SLB close the week on Friday.