Stocks closed lower Friday as geopolitical uncertainty ramped up and Treasury yields and oil prices climbed. Market participants also looked ahead to next week's jam-packed earnings and economic calendars, which feature quarterly results from several mega caps, as well as the October Fed meeting.

At the close, the blue-chip Dow Jones Industrial Average was down 1.2% at 52,215, the broader S&P 500 was 0.5% lower at 7,623, and the tech-heavy Nasdaq Composite was off 0.2% at 25,955. The Dow managed to hold on for a weekly win, but the S&P 500 and Nasdaq were lower week over week.

Treasury yields resumed their climb on Friday. The yield on the 2-year (+5.1 basis points at 4.686%), 10-year (+4.8 bps, 5.001%) and 30-year (+4.2 bps, 5.329%) Treasuries were all higher at the close.

Oil prices rose, too, after Iran said it is prepared to attack should the U.S. and Israel resume strikes against Tehran. Front-month West Texas Intermediate crude futures climbed 3.8% to $103.27 per barrel, and are now up 14% for the month to date.

Despite higher yields and lofty energy prices, the Federal Reserve is widely expected to keep interest rates unchanged when its October meeting concludes next Wednesday afternoon.

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"Recent inflation readings have been on the warm side — especially at the producer level — but a wave of Fed speakers suggesting there was no rush to raise rates has provided a strong counterpoint," says BMO Chief Economist Douglas Porter, who adds that a "cooldown in the AI sector and milder job growth" have taken the heat off the central bank.

Still, he expects the Fed to raise interest rates in December and March.

American Express sinks on layoff news

In single-stock news, American Express (AXP) dropped 3.7%, making it the worst Dow Jones stock today. This came after the credit card giant said it is cutting 5% of its workforce to make it "leaner, more agile, and also to prepare for AI," as Chief Financial Officer Christophe Le Caillec told CNBC.

AXP had nearly 77,000 employees at the end of 2025, which suggests roughly 3,850 jobs will be eliminated. The company said it took a $336 million restructuring charge in Q3 as a result.

Still, American Express reported third-quarter earnings of $4.68 per share, up 13% year over year and more than analysts expected. Revenue of $20.1 billion also exceeded estimates. Additionally, AXP raised the low end of its full-year earnings-per-share guidance.

Wall Street remains upbeat toward the blue chip stock, too. Of the 30 analysts covering AXP who are tracked by S&P Global Market Intelligence, 10 say it's a Strong Buy, five have it at Buy and 15 rate it at Hold. This works out to a consensus Buy recommendation.

Bloom Energy sinks on cash flow concerns

Elsewhere on the earnings calendar, Bloom Energy (BE) slumped 11.2% after the manufacturer of fuel cells, which are used to power data centers, reported its third-quarter results.

While BE reported higher-than-expected third-quarter earnings and revenue and raised its full-year guidance, its free cash flow and operating cash flow were both negative.

"Bloom Energy is spending a lot of money striving to boost its fuel cell production fivefold, so some naysayers are worried about its cash burn," says Louis Navellier, InvestorPlace analyst and host of the Navellier Market Buzz. "I want you to know that companies like Bloom Energy have such massive order backlogs, so I disagree with criticisms of Bloom Energy's ramp-up."

Next week is a big one for earnings, too, with Alphabet (GOOGL, -1.2%), Caterpillar (CAT, -2.4%) and Amazon (AMZN, -1.0%) among those reporting.

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Too much information about stock market seasonality can lead to overload and bad decisions for investors. Just enough can be fun, even valuable if properly deployed.

Indeed, traders and speculators who specialize in technical analysis take advantage of inefficiencies created by retail investors going too deep on those kinds of things.

And even among the experts, you'll find an amusing variance in how they define things such as the "Santa Claus Rally."

At the same time, as some of the greatest asset allocators who ever lived will tell you, the stock market is a reflection of us, our emotions and our psychology.

Warren Buffett said it's a "popularity contest" in the short term, a "weighing machine" in the long term. He also described it as "a church with a casino attached."

Those are colorful words from one of the best who ever did it. Basically, though, it is a barometer of human behavior, including our emotions and psychology, as well as what we choose to consume and when.

Think about it for a second: It's October, so you're probably pulling out your sweaters and corduroy, maybe prepping to do some leaf work in the yard, perhaps watching football, possibly hitting a pumpkin patch.

As much as we want to understand ourselves and how we behave as investors, we can also profit from seeing how our decisions plus those made by others like us aggregate over time.

So seasonality offers another reference point along that journey, a map based on history and data to use as you approach prevailing terrain.

But it's just a guide.

And this quiz is for edutainment purposes only.

More on investing from the Kiplinger team:

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• Stop Waiting for the Perfect Moment to Invest: There Isn't One
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• The 5 Best Long-Term Investment Stocks to Buy for Steady Returns
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• 5 Stocks to Avoid as Interest Rates Rise This Fall
• 5 Best Momentum Stocks to Buy for More Upside in 2027

Some of the greatest investors in history have famously favored a substantial home-country bias for U.S. investors, meaning a portfolio overwhelmingly weighted toward American stocks.

Perhaps the most famous example is Warren Buffett. Beyond his long-running optimism ("never bet against America"), the Berkshire Hathaway chairman emeritus has left remarkably simple instructions for how money left for his wife should be invested after his death: 90% in a low-cost S&P 500 index fund and the remaining 10% in short-term Treasury bonds.

Vanguard founder John Bogle expressed a similar preference. Despite Vanguard becoming one of the world's largest providers of international mutual funds and exchange-traded funds (ETFs), Bogle argued that foreign stocks weren't necessary for a well-diversified U.S. investor. He generally favored a heavy U.S. allocation and suggested that investors who wanted global diversification limit it to no more than 20% of their equity portfolio.

Today, however, international exposure remains a standard component of many professionally constructed portfolios. Owning stocks outside the U.S. can reduce dependence on a single country's economy, market valuations, sector composition and currency while providing exposure to companies and industries that aren't well represented domestically.

If you're a do-it-yourself investor, that leaves a practical question: How much international exposure, if any, should an ETF portfolio actually have?

Below, we'll examine the case for and against investing abroad, look at how some of the largest global equity ETFs divide their portfolios between U.S. and international stocks and highlight low-cost ETFs that can help you build an international allocation.

Why allocate to international stocks?

Despite the U.S. stock market's stellar performance over the past decade and its outsized influence on global markets, it's still just one basket.

Diversification can mean spreading investments across large-, mid- and small-cap stocks, value and growth styles, and all 11 stock market sectors.

It can also mean investing across different countries. One of the most instructive ways to visualize is with an asset return map spanning 2017 through 2026 from the BlackRock Investment Institute.

Sometimes called an "asset-class quilt," this type of chart ranks the annual returns of different asset classes, geographies and market segments:

Even during a period when U.S. equities performed exceptionally well overall, they didn't lead every year.

Chinese equities outperformed U.S. stocks in 2017, 2019 and 2020, while European equities took the lead in 2025. Emerging-market equities also delivered superior returns during several periods.

There is no readily discernible pattern an investor could have reliably used beforehand to move between these markets at exactly the right time.

Indeed, that's one of the arguments for owning the broader basket and allowing market dynamics to determine which regions contribute most to returns over time.

History also offers a more painful example of why geographic diversification can matter. The U.S. stock market experienced what is commonly called the "lost decade," generally referring to the period encompassing the aftermath of the dot-com bubble and the 2007-09 global financial crisis.

From January 1999 through December 2009, U.S. stocks produced an annualized total return of just 1.7%, according to Portfolio Visualizer. Adjusted for inflation, the annualized return was actually negative at -0.8%.

International developed markets did better at 4.1% annually, or 1.6% after inflation. Emerging markets were the standout, returning 13.7% annually and 10.9% after inflation:

With hindsight, it's easy to say that a young investor should simply have kept dollar-cost averaging into U.S. stocks at depressed valuations. Living through the experience is different.

Few investors have unlimited tolerance for watching a portfolio effectively go nowhere for a decade and actually lose purchasing power after inflation.

And there's no rule saying a future period of underperformance must last only 10 years. Japan provides a particularly sobering example.

The Nikkei 225 peaked at 38,915 at the end of 1989 following an enormous asset bubble. Japanese equities subsequently collapsed, and the country's economic difficulties became known first as the "lost decade" and eventually the "lost decades."

The Nikkei didn't surpass its 1989 record until February 2024, more than 34 years later.

That history provides a useful thought experiment for U.S. investors. How much of today's preference for U.S. stocks reflects their genuinely attractive characteristics, and how much reflects recency bias after an unusually strong period of relative performance?

If you'd been a Japanese investor near the end of 1989, after years of exceptional domestic returns and with Japan representing an enormous share of global equity markets, how comfortable would you have been putting virtually your entire stock allocation into Japan for the next three decades?

There are legitimate advantages to a U.S. home-country bias. Holding domestic stocks avoids the direct currency fluctuations that come with owning foreign assets denominated in euros, yen, pounds and other currencies.

U.S. stocks can also be simpler from a tax perspective. Foreign investments may involve withholding taxes on dividends and other complications, while qualified dividends from eligible U.S. companies can receive preferential federal tax treatment.

Those are worth considering, but they are generally secondary portfolio-construction considerations rather than the starting point. Asset allocation determines how much you hold in stocks vs bonds and, within equities, how broadly you diversify across countries and regions.

Those decisions should primarily reflect your objectives, risk tolerance and time horizon. Tax treatment, currency exposure and the particular ETFs used to implement the allocation come afterward.

What the leading global equity ETFs do

If you believe adding international stocks makes sense, the next question is the one that tends to cause analysis paralysis: How much should you allocate outside the U.S.?

There are two practical approaches. The first is to let market capitalization determine the allocation automatically. The second is to choose your own target allocation and periodically rebalance the portfolio back toward it.

Market cap is simply a company's share price multiplied by its number of shares outstanding. A market-cap-weighted global index extends that concept across countries.

As the collective market value of one country's companies increases relative to the rest of the world, that country receives a larger weight. If it decreases, its weight falls.

There are several advantages to this approach. Turnover tends to be low because you're not constantly trying to decide which country deserves a larger allocation.

If China, India or another market eventually becomes a much larger share of the global stock market, its allocation can increase naturally. If U.S. stocks continue outperforming and maintaining their dominant share of global market cap, you continue to benefit from that, too.

You're not systematically selling winners simply because they've exceeded an arbitrary geographic target. It's about as hands-off as international diversification gets.

For many investors, that's also the difficult part. It requires resisting the temptation to tinker with allocations based on whichever country has recently performed best or worst.

There isn't, however, one universally authoritative definition of the "global stock market." Different index providers define their investable universes differently, and the resulting U.S.-vs-international allocation can vary considerably.

Consider the iShares MSCI World ETF (URTH). It tracks the MSCI World Index, and an investor using URTH as a reference point might therefore arrive at a 70% U.S./30% international equity allocation.

But the MSCI World Index has an important limitation: Despite its name, it covers only developed markets. Emerging markets such as China, India, Taiwan and Brazil are excluded.

Contrast that with the Vanguard Total World Stock ETF (VT), which tracks the FTSE Global All Cap Index. Here, U.S. stocks account for roughly 60% of the portfolio.

One major reason is that VT includes emerging markets, which collectively account for approximately 10% of the fund.

The alternative is to choose an international allocation yourself. You might decide on 10%, 20%, 30%, 40% or even 50% of equities outside the U.S.

The exact percentage is arguably less important than selecting an allocation that you understand and can realistically stick with through periods when either U.S. or international stocks are lagging.

You can backtest different combinations indefinitely and fit the data to find the U.S.-international split that would have produced the best historical result. But that optimization is inherently backward-looking.

The winning allocation over the previous decade tells you what worked during that particular decade, not what will work during the next one.

If you set your own target, the more important decision is establishing a systematic rebalancing policy.

One approach is calendar-based, such as reviewing the portfolio quarterly or annually and restoring the target weights. Another is threshold-based, where you rebalance only after the U.S. or international allocation moves a predetermined amount away from its target.

Rebalancing doesn't necessarily require selling, either. Investors who are still accumulating can direct new contributions toward whichever allocation has fallen below its target.

That can be particularly useful in taxable accounts, where selling appreciated ETFs may realize short- or long-term capital gains and create an immediate tax bill.

Ultimately, a lot of the debate over international stock allocation amounts to splitting hairs. If you've already decided that geographic diversification belongs in your portfolio, much of the important work is done.

Choose an allocation you can maintain, establish rules for rebalancing it and avoid repeatedly changing the plan based on whichever market happens to be leading at the time.

Currency hedging adds another wrinkle

Another thing investors should understand before dismissing the historical performance of international stocks is that returns haven't always been driven solely by the underlying companies. Currency movements can either help or hurt a U.S. investor's return, sometimes substantially.

Consider the iShares Core MSCI EAFE ETF (IEFA). It invests across developed markets outside the U.S. and Canada, meaning its underlying stocks trade in currencies such as the euro, Japanese yen, British pound and Swiss franc. But IEFA itself trades in U.S. dollars, which creates an additional source of return and risk.

If the U.S. dollar strengthens against those foreign currencies, the value of the foreign investments translates into fewer dollars, creating a headwind for a U.S. investor. If the dollar weakens, the opposite occurs: Those foreign assets translate into more dollars, providing a tailwind even if the underlying stocks themselves haven't performed any better.

ETF issuers are well aware of this, which is why many offer currency-hedged versions of their international funds. IEFA's counterpart is the iShares Currency Hedged MSCI EAFE ETF (HEFA).

HEFA provides similar developed-market equity exposure. But this fund seeks to hedge its foreign currency exposure back to the U.S. dollar, reducing the effect of exchange-rate movements on returns.

Over the 12.6-year period through September 24, this distinction made a substantial difference. According to Testfolio, HEFA produced a 10.7% annualized return, compared with 7% for IEFA. Cumulatively, that worked out to approximately 260.7% vs 135.1%.

Assuming distributions were reinvested and ignoring taxes and trading costs, a $10,000 investment would have grown to approximately $36,069.62 in HEFA vs $23,509.48 in IEFA.

Does that mean HEFA is inherently the better international ETF? No. It means currency hedging was beneficial over this particular period, during which the U.S. dollar strengthened substantially against several developed-market currencies. The hedge insulated HEFA from much of that currency headwind.

If the U.S. dollar instead weakens against those currencies, the relationship can reverse. An unhedged international ETF such as IEFA can benefit from the currency translation, while a hedged ETF such as HEFA largely gives up that tailwind.

All else being equal, the same mechanism that helped HEFA during a strong-dollar environment can work against it during a sustained period of dollar weakness.

If you have a shorter time horizon or a particular desire to isolate the performance of foreign stocks, you may prefer to hedge some or all of your currency exposure. Over a multi-decade horizon, however, predicting currency movements becomes extremely difficult, and exchange rates can move through lengthy cycles in either direction.

If you don't have a strong view, there's nothing wrong with splitting the difference. A 50/50 allocation between hedged and unhedged international exposure, periodically rebalanced, reduces the need to make an all-or-nothing bet on the future direction of the U.S. dollar.

As with the international allocation itself, having an investment policy you can follow may be more useful than continually trying to predict which currency regime comes next.

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Stocks closed mostly lower Thursday as poorly received Magnificent 7 earnings and concerns about AI spending sparked a sell-off across the tech sector. Ahead of next week's Federal Reserve meeting, market participants are also worrying about how rising oil prices will impact inflation and interest rates.

At the close, the tech-heavy Nasdaq Composite was down 2.6% at 26,008 and the broader S&P 500 was 1.2% lower at 7,663, while the blue-chip Dow Jones Industrial Average ticked 0.02% higher to 52,867.

Oil prices climbed after President Donald Trump said late Wednesday that the U.S. is not currently negotiating with Iran to end the war in the Middle East. Front-month West Texas Intermediate crude futures rose 3% to $100.06 per barrel, and are now up nearly 11% month to date.

Meta sinks on free cash flow worries

Meta Platforms (META) was one of the biggest drags on the Nasdaq Thursday, with the Facebook parent sliding 7% after earnings, marking its worst day since July.

Meta's third-quarter revenue of $64.6 billion beat Wall Street's estimate, as did its fourth-quarter revenue forecast. But earnings of $3.83 per share fell short, and free cash flow turned negative as spending on its AI initiatives ramped up.

The company raised the low end of its full-year capex, now expecting to spend between $135 billion and $145 billion, compared to its previous outlook of $130 billion to $145 billion.

"In our view, Meta is entering a capex harvest cycle, with three years of investment in frontier AI models beginning to translate into both stronger near-term advertising performance and accelerating adoption of AI products," says UBS Global Research analyst Stephen Ju. "We believe Meta can further improve ad targeting and content recommendations through optimized versions of its Muse model, creating upside to our 2027 and 2028 revenue forecasts."

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Meta also said its board of directors approved the establishment of non-voting Class C shares, which will be publicly traded and distributed to those who own its Class A common stock and Class B super-voting shares.

The Class C shares will begin trading in January 2027, and the price of the Class A shares will "reflect the effect of a two-for-one stock split," says Meta.

Part of the reason Meta is creating the new Class C shares, the company explains, is to preserve CEO Mark Zuckerberg's voting control and ensure he remains in California to lead the company, both of which were at risk pending passage of California's proposed wealth tax in November. It will also help fund the company's AI expansion plans.

Tesla falls after earnings

Tesla (TSLA) was another Magnificent 7 stock that slumped after its late-Wednesday turn on the earnings calendar, with the electric vehicle (EV) maker shedding 3.1%.

The company reported third-quarter earnings of 48 cents per share on revenue of $28 billion, which was higher than analysts expected, but lower than the year prior.

TSLA also said operating expenses jumped 39% in Q3, which dragged on margins. Additionally, the company lowered its full-year capex forecast to $20 billion from $25 billion.

"With regard to a potential merger with SpaceX (SPCX, -9.1%), I think I said everything that should be said yesterday, tap-dancing through a minefield there," noted CEO Elon Musk on Tesla's earnings call. "And yes, that's it. "

Procter & Gamble has its best day in six years after earnings

Procter & Gamble (PG) found itself on the positive side of the ledger after earnings, rising 5.6% — the Dow Jones stock's best day since March 26, 2020, when it rose 6.4%, according to Morningstar.

The consumer products giant reported higher-than-expected fiscal 2027 first-quarter earnings and revenue, while volume growth jumped 2.4% year over year.

"We are getting the balance between pricing and product improvements, package improvements, claims, communication and retail execution right," Chief Financial Officer Andre Schulten said on the earnings call. "But it's also a very fragile balance that we want to make sure we don't compromise on, so we will price, and we will price with innovation, not jeopardizing the top-line momentum."

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After the first increase to the federal funds rate in three years following the September Fed meeting, you're probably looking closely at your holdings, as well as across the market, for stocks to avoid as interest rates rise.

With inflation issues still persistent and a clear desire from the central bank to stabilize prices, the future likely includes higher rates. Naturally, that will disrupt both stock and bond markets.

If you're focused on long-term growth, obviously you shouldn't abandon the market altogether because of short-term volatility prompted by uncertainty about interest rates.

However, rising interest rates can cause big problems for certain businesses that depend on borrowing, need frequent refinancing or generate too little cash to cover their financial obligations.

As rates rise, these activities become more costly and eat into profitability. Although higher rates aren't guaranteed, the 10-year Treasury yield has already hit its highest level in more than two decades.

That means investors have ample data to show that borrowing costs and Treasury yields are already having an impact, particularly on firms with weak share-price performance and uncertain paths to stronger profits.

The following companies face a combination of financial and business headwinds that could make them particularly vulnerable in the months ahead as interest rates rise.

Here are five stocks to avoid as interest rates rise.

Data is as of October 21.

Boeing

• Market value: $151.9 billion
• Sector: Industrials

Boeing (BA) has a long road ahead as it works to restore profitability and investor confidence following years of production problems, safety concerns and costly delays. That task will be even harder as rates rise.

The aerospace manufacturer faces elevated borrowing costs, along with its substantial debt burden limiting financial flexibility while it attempts to improve manufacturing efficiency.

In September, the firm's CEO acknowledged that stabilizing production of the 737 MAX was taking longer than expected and delays in increasing production of its 787 Dreamliner also persist.

With some $26 billion in debt and operations currently in the red this fiscal year, strong demand for new aircraft alone can't cause this industrial stock to take off.

Higher financing costs would make an increasingly delayed turnaround even more expensive, and shares have declined by double digits in 2026 in part because of these challenges.

The fact that its customers may also face borrowing headwinds for big-ticket Boeing planes makes the situation even less attractive.

Carnival

• Market value: $36.9 billion
• Sector: Consumer discretionary

Carnival (CCL) faces a challenging combination of substantial debt, rising operating expenses and sensitivity to consumer spending.

This last point is particularly noteworthy, as Carnival typically is not catering to the highest tier of consumers. And many of its customers could see purchasing power eroded significantly by higher interest rates.

That one-two punch could make the cruise operator particularly vulnerable if interest rates remain elevated, as it faces operational headwinds even as its itineraries become less budget-friendly for travelers.

The company has roughly $25 billion in debt, and some $2.5 billion scheduled to mature in 2027 and another $4 billion is maturing in 2028, according to SEC filings. At the same time, operating expenses are on the rise in 2026 thanks to elevated fuel prices.

Small wonder shares of the consumer discretionary stock are down about 25% from their February highs before the U.S. bombed Iran. Although demand for cruises hasn’t crumbled yet, a combination of higher rates and higher costs make Carnival a risky bet.

Crown Castle

• Market value: $33.5 billion
• Sector: Real estate

Crown Castle (CCI) is a real estate investment trust (REIT) that specializes in telecommunications infrastructure. Among specialty REITs, it's certainly a stable business. But it's also not exactly growing at breakneck speed given market saturation.

What's more, maintaining and growing a network of cell phone towers for lease to wireless service providers takes significant capital, and CCI's debt load and recent business transition make it vulnerable if interest rates continue to rise.

The company has been restructuring its operations and selling its fiber businesses to focus more heavily on wireless towers. Proceeds from the asset sale seem a good thing, as they're intended to help reduce the firm’s massive debt load of about $30 billion.

But the move also leaves Crown Castle more dependent on tower leasing from wireless carriers that face their own spending crunch amid rising telecom borrowing costs.

In fact, the company has forecast a decline in 2026 site rental revenue that reflects these challenges. And with a leadership transition at the company that includes the third CFO since 2025, the company's ongoing changes bring these financing challenges into greater focus.

Lucid Group

• Market value: $1.3 billion
• Sector: Consumer discretionary

Lucid Group (LCID) has long been a high-risk investment as the luxury electric vehicle maker has looked to build out its global footprint and become a leader in the emerging EV category.

However, Lucid has struggled to match its production with demand. Lack of profitability, rising rates and a risk of consumer borrowing headwinds create even bigger problems going forward.

The company's latest delivery figures of 3,806 vehicles for the third quarter show just how small LCID stock is compared with other automakers.

Even if you look past the intense competition in the market to gain share, high manufacturing costs and the challenge of reaching true scale are daunting.

The company has cut jobs as part of its cost-reduction efforts and a hope to reduce cash burn, but there's little room for execution problems or slower build-out if this stock is going to live up to the growth promises of the past year or two.

And while higher financing costs are a practical concern, equally troubling is a gut-wrenching drop of about 80% in the last 12 months as investors have given up on this one-time momentum darling.

A combination of financial woes and Wall Street pessimism creates an awfully tough hill to climb for this EV company.

Vornado Realty Trust

• Market value: $6.1 billion
• Sector: Real estate

Another real estate leader, Vornado Realty Trust (VNO) is exposed to two challenges that can be particularly damaging when interest rates are high: a tough office property market and the cost of financing a massive commercial real estate portfolio.

The New York-focused landlord has been working to improve occupancy in the last year or so, but big-ticket office properties continue to face pressure from changing staffing patterns in the age of remote work.

Shares remain about half of where they were right before the pandemic of 2020, and the fact that rates are now at multi-decade highs put even more pressure on this struggling real estate leader.

Its debt obligations provide a more immediate reason for caution.

Recently, mortgages have been sent to "special servicing" as a sign of potential default. Although Vornado secured forbearance agreements to soften the blow for several months, interest and payments continue to accrue.

That delay could allow for asset sales to fund refinancing, but the current high interest rate environment makes the timing of those deals very painful.

Investors should closely watch VNO as a prime example of the kind of stocks to avoid as interest rates rise.

With limited balance sheet flexibility and a steady increase in borrowing costs, it's no wonder shares of this REIT are down about 14% in the last 12 months.

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All three main equity indexes were lifted by general optimism about the AI revolution on Wednesday, with incoming data showing an actual return on investment for one of its major players. Whether that trend persists is the controlling question for markets, with more earnings and guidance from the new economy's leaders on the immediate horizon.

By the closing bell, the tech-heavy Nasdaq Composite was up 1.1% at 26,702, the broad-based S&P 500 had added 0.6% to 7,757, and the blue-chip Dow Jones Industrial Average was higher by 0.7% at 52,856.

Price action in the bond market was relatively muted, with the 2-year Treasury yield up 2.3 basis points to 4.81%. Yields on the 10-year (+0.6, 5.123%) and the 30-year (-1.2 bps, 5.413%) Treasuries drifted mostly sideways.

"The recent volatility in the AI trade may have rattled the market," observes Morgan Stanley Wealth Management Portfolio Manager Daniel Skelly, "but it's arguably a healthy development, especially given a backdrop of solid growth and strong earnings."

Skelly acknowledges that concern about spending is "merited given the boom-bust nature of some previous US innovation episodes." At the same time, he concludes, "The long-term AI capex cycle remains intact and should continue to favor large players with strong balance sheets."

Why a SpaceX-Tesla merger is only a matter of time

SpaceX (SPCX, +7.8%) announced its presence on the earnings calendar with authority after the closing bell on Tuesday, including a big bottom-line beat driven by rapid growth for its Super Intelligence and Starlink segments.

But the bigger news might be what CEO Elon Musk said about the biggest potential M&A transaction in stock market history, a long-rumored tie-up between SpaceX and Tesla (TSLA, +3.4%).

According to Musk, the boards of both SpaceX and Tesla have formed special committees to talk about a merger between the two companies.

"I do think there's a lot of merit to combining the companies," Musk said during a conference call to discuss SpaceX results. "There's a lot to be gained from cooperating on developing superintelligence software."

Nobody knows anything, especially about the future. But even a limited data set indicates the probability the SPCX and TSLA boards see the situation the same way their CEO sees it is a lot closer to 100% than it is to 0%.

What that deal means for AT&T

AT&T (T, -6.5%) also reported expectations-beating top- and bottom-line results for its third quarter. Management raised its full-year earnings guidance, and AT&T is accelerating its stock buyback program, too.

Revenue was up 5.3% year over year to $32.3 billion, vs a FactSet-compiled consensus estimate of $31.7 billion. Earnings per share came in at 65 cents vs estimates of 60 cents. AT&T said 2026 EPS will be $2.40, up from a range of $2.25 to $2.35 offered in July.

"The accelerated growth we delivered this quarter shows our structural advantages to lead the next era of connectivity," CEO John Stankey said in a statement. "We are accelerating the pace of our planned share repurchases this year to approximately $10 billion, reflecting our confidence in our market position."

But the blue-chip dividend stock still fell sharply on Wednesday. AT&T reported 379,000 new postpaid subscribers, missing a consensus forecast for 379,300. That's also down from 432,000 new adds in the second quarter.

Postpaid subscribers generate long-term recurring revenue. Deterioration here is an indicator of competitive pressures from existing market participants such as Verizon Communications (VZ, -2.2%) and T-Mobile US (TMUS, -2.5%).

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Despite what Stankey said about its structural advantages and its position in this emerging era of connectivity, markets are also pricing the potential impact on the prevailing market-share pie of new service providers such as SpaceX.

T (down 4.7% through October 20 vs -0.7% for the S&P 500), VZ (-2.3%) and TMUS (-7.9%) have all suffered since October 8, when SpaceX accelerated its plans to launch a consumer wireless telecom business with an $8 billion spectrum purchase that will allow Starlink to compete with the incumbents.

Meta's latest muse

Tesla and fellow Magnificent 7 stock Meta Platforms (META, +0.5%) are reporting third-quarter financial and operating results after the closing bell. Independent tech analyst Luke Lango is particularly bullish on the latter.

"Meta heads into earnings as a frontier AI contender, not just an ad company, and the market hasn't fully priced that shift. The core business is humming, and we expect revenue to clear the $63.3 billion consensus by $1 billion or more on growth north of 20%, a pace few mega caps can touch."

According to Lango, Meta's brand-new Muse is the real story after the AI agent "topped 10 million downloads in about six weeks, a launch pace only a dozen apps have ever hit."

The analyst cites SpaceX's "blowout" earnings as evidence that agents and the computing power to support them "are already making real money." As Lango sees it, this totally reframes the capex debate. "When compute is this scarce and this valuable," he writes, "a bigger spending plan isn't recklessness, it's a land grab."

Lango is looking for Mark Zuckerberg's outfit to post strong ad numbers and "hard" Muse metrics. "At roughly 20 times next year's earnings," the analyst concludes, "Meta is one of the cheapest ways to own the AI agent era."

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To help you understand the trends surrounding business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

Launching data centers into space is a moonshot. It’s hard to see the tech expanding beyond niche uses, even given a decade or more to develop. But big bets and upcoming activity are worth watching.

Start with Google recently launching its first test computer chips, known as Tensor Processing Units (TPUs), to see how they handle the harsh conditions of space, such as the vibrations of spaceflight, radiation and extreme temperatures. Google is working with satellite firm Planet to see if AI chips survive space phenomena that can "wreak havoc on electronics."

Others working on the tech include Starcloud, K2 Space, Blue Origin, Axiom Space and Cowboy Space. Nvidia, too, has a specific chip design for the stress of orbit. Before the recent Google launch, there were others who had similar tests.

SpaceX will dominate the field

SpaceX’s long-term plans overshadow all the rest: Annually launching thousands of data centers that use up to 100 gigawatts of power. (The largest data center on Earth, owned by SpaceX, uses about 1 gigawatt of power.) The vertically integrated juggernaut has a massive edge by controlling its own rocket and satellite-manufacturing facility.

"We believe orbital AI compute is an incredibly difficult technical challenge that only we can solve at scale in the near term," SpaceX said in its IPO prospectus.

CEO Elon Musk says SpaceX’s orbital data centers will start launching in 2027 and that the company has plans to build a network of up to 1 million orbital data centers. The satellites will be 100 feet high with a 250-foot wingspan, covered in solar panels and an 1,800-square-foot radiator with liquid cooling. For now, SpaceX is using Nvidia chips, but the space giant eventually wants to build its own chips at its Terafab facility in Texas.

AI data centers could come to dominate the payloads of its rockets, just as Starlink satellites have. In fact, SpaceX’s orbital data centers are the only payload that could even come close to creating the demand for hourly Starship launches, another of Musk’s goals.

The long list of technical challenges

Why go to space? To bypass the power and physical constraints on Earth. Sunlight is unlimited and five times more powerful in space, a big draw for power-hungry AI computing. Plus, leaving our atmosphere makes activist opposition, pollution concerns and other issues vanish.

But there’s a long list of obstacles to overcome. In addition to spaceflight vibration, radiation and extreme temperatures, the vacuum of space has no airflow, so intense heat from AI chips needs to be radiated with large metal panels. Many consider that a major challenge, but Musk isn’t fazed.

"For some reason there's been a bizarre debate about radiators in space," he said at a SpaceX presentation this year. "It's safe to say, SpaceX knows how to do heat rejection in space, with 10,000 satellites in orbit."

Orbital data centers also need to be connected to each other by high-bandwidth lasers and send data speedily back to Earth. Data delays would seriously limit the usefulness of many applications. Meanwhile, chip failures and other technical issues may have to be fixed by robots in space. And the chips will have to be replaced every 5 years or so, if not more often because of the harsh conditions.

After you solve the technical issues, the business model looks brutal when compared with traditional data centers on land. Advocates counter that they see launch costs plummeting over the next decade-plus, courtesy of SpaceX’s supersized Starship, as the chips and satellite tech drastically improve and demand for AI zooms ahead.

Google has admitted that its plans rely on SpaceX vastly driving down the cost of launching data centers. Google sees this possibly happening by 2035, if Starship takes flight nearly 200 times per year with packed payloads. And if SpaceX passes cost savings in its launches to its outside customers.

In a white paper, Starcloud argues that if launch costs fall and orbital data centers are scaled up, space systems will have lower operating costs than the hulking chip-packed facilities in Northern Virginia, Texas and elsewhere. That stems from lower energy and cooling costs, along with ditching the permitting challenges and physical constraints on land.

Breakthroughs are on the way

Expect breakthroughs in coming years, proving the tech is viable, if exceedingly costly. But don’t expect a viable alternative to traditional data centers on Earth anytime soon, even with serious power constraints and rising opposition to data centers.

SpaceX bets that a huge, profitable business emerges someday. "Over the long term, however, we expect Earth’s finite resources will not be able to sustain the immense computational demands of advanced AI models," according to the company’s prospectus. Still, SpaceX notes the risk that even if space is commercially viable, a serious slowdown in AI’s growth could make terrestrial data centers sufficient to handle future computing needs.

If commercial customers do emerge in the 2030s, the likeliest buyers are governments and the military, which would be more willing to pay a premium for research or security.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Stocks finished mostly higher Tuesday as long-term Treasury yields retreated and oil prices eased back. A round of well-received earnings reports helped offset disappointing housing data, with more corporate reports due out after tonight's close — including results from mega caps Netflix (NFLX, -1.7%) and SpaceX (SPCX, -0.1%).

At the end of Tuesday's session, the blue-chip Dow Jones Industrial Average was up 1% at 52,495, the broader S&P 500 was 0.3% higher at 7,712, and the tech-heavy Nasdaq Composite was marginally lower at 26,424.

Yields on the 10-year (-2.1 basis points to 5.115%) and 30-year (-5 bps to 5.423%) Treasury notes helped lift the main equity benchmarks, as did falling oil prices. Front-month West Texas Intermediate crude futures shed 0.9% to $102.75 per barrel, though they remain nearly 14% higher month to date.

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3M jumps on Amazon data center deal

3M (MMM) was the best Dow Jones stock on Tuesday, rising 5.8% for its best day since July, after the industrial conglomerate's beat-and-raise quarter.

In Q3, the company said earnings grew 14.2% year over year to $2.50 per share — more than Wall Street expected — while revenue was up 4.2% to $6.6 billion, slightly below analysts' estimates. 3M also expects full-year earnings per share of $9.10 to $9.15, up from its previous forecast of $8.80 to $8.95.

While earnings were impressive, Wall Street also cheered a separate announcement from 3M regarding "an expanded strategic commercial relationship with Amazon (AMZN, +0.07%) to deploy and scale 3M's optical connectivity and other Data Center related products."

According to a regulatory filing (pdf), the deal gives Amazon the option to purchase 3.2 million MMM shares over the next seven years, contingent upon several milestones, including $6 billion in sales of 3M's optical connectivity and other data center-related products.

Ally Financial hikes its dividend by 17%

Elsewhere on the earnings calendar, Ally Financial (ALLY) rose 1.0% after the top online bank reported third-quarter earnings of $1.34 per share, up 16% year over year, on revenue of $2.3 billion (+9% YoY). The results surpassed Wall Street's expectations.

Separately, the financial firm said its board of directors approved a 17% increase to its quarterly dividend. This marks the first time since late 2021 that Ally Financial hiked its payout.

Braze soars 52% on Salesforce buyout

In non-earnings news, Braze (BRZE) shares shot up 51.7% Tuesday on news that Salesforce (CRM, -0.01%) will buy the customer engagement platform in an all-cash deal valued at roughly $5.66 billion.

Salesforce says the transaction is expected to close in fiscal 2028, and upon completion, "Braze's real-time engagement and AI decisioning capabilities are expected to complement all four layers of Salesforce's architecture — Data 360, Customer 360, Agentforce, and SIForce."

Earlier this month, BofA Securities analyst Tal Liani double-upgraded Salesforce to Buy from Underperform (the equivalent of Sell).

"Our prior concern centered on AI-driven disintermediation," Liani wrote in a note about the blue chip stock. "However, conversations with CIOs and other market participants suggest that large enterprises (more than small-to-medium-sized businesses) are unlikely to replace platforms that house their business logic, data, workflows and compliance frameworks."

And AI, he adds, "should deepen dependence on these platforms." He believes that Salesforce has a credible AI strategy and is poised for strong free cash flow generation.

Housing starts, pending home sales fall short

In economic news, data from the Census Bureau showed building permits slipped 0.2% from August to September to a seasonally adjusted 1.4 million. Housing starts, meanwhile, plunged 5.2% month over month in September to 1.2 million.

"The affordability challenges hurting transaction momentum have builders significantly slowing their construction pace, as this morning's September housing starts data posted the second-worst number since the pandemic recession in 2020," says José Torres, senior economist at Interactive Brokers.

Building permits, he adds, were "less dim," with construction companies focused "on apartment rentals rather than single-family projects."

Separate data from the National Association of Realtors showed that pending home sales slumped 7.3% from August to September, and were down 11.3% year over year. Torres points to "elevated mortgage rates and lofty valuations," which are offsetting "the positive impacts of buoyant stock market performance, healthy hiring and subdued unemployment."

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To help you understand the trends surrounding business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

As Anthropic and OpenAI dominate the headlines, plenty of younger AI companies are nipping at their heels.

Those companies are still able to raise gobs of cash from venture capitalists and other investors at ever-higher valuations (despite concerns of overspending and the risk of an AI bubble) as investor enthusiasm for AI outruns its immediate business prospects.

Most of the money is being used to buy computing power for start-ups’ own data centers or outside cloud computing. Ultimately, that means the money fuels higher sales of Nvidia graphics processing units, as well as central processing units and memory.

Anthropic is valued at $1.2 trillion, followed by OpenAI’s $852 billion. Both Anthropic and OpenAI expect to go public at far higher valuations.

Other top companies are Databricks, Cognition, Ramp, Thinking Machines Lab, Project Prometheus, Safe Superintelligence, VAST Data, Perplexity and Sierra. China’s ByteDance, the owner of TikTok, has a valuation of $480 billion. China’s DeepSeek is valued at $59 billion.

Private valuations are a moving target. These days, the target is moving steadily higher, as new funding rounds from eager investors push valuations up.

Sources: CB Insights, “State of AI: Q3 2025”; company press releases; news reports

Some highly valued start-ups have tiny staffs and no product or revenue, at least not yet, with investors betting big on the founders as visionaries. Others have soaring sales, as is the case with leaders Anthropic and OpenAI, but are spending even faster than revenue is rising.

The different solutions highlight the varied AI ecosystem. Databricks is a cloud platform for massive amounts of data and analytics, for example. Project Prometheus, which is backed by Amazon founder Jeff Bezos, focuses on robotics and other physical hardware. Perplexity has a free AI-powered search engine.

Investors are betting that there’s room for many winners in the AI race.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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There's something especially appealing about being first to the table. That's a big part of why initial public offerings (IPOs) attract so much attention. Instead of waiting until a company has spent years or even decades on the market, an IPO gives you the chance to buy a stock when it first begins trading in public markets.

You may also get to reap the benefits of the famous first-day "pop" in price. But buying early doesn't necessarily mean you're getting a good price, or even a good investment.

Newly public companies often arrive with lots of hype and valuations that can be difficult to justify. And while some IPOs go on to become major winners, others stumble and take years to recover.

This doesn't mean you need to steer clear of all IPOs. But it does mean you should understand the pros and cons of an IPO and how to spot a potential gem from a dud before buying in.

What are the pros of investing in an IPO?

IPOs aren't inherently better investments simply because they're new, but they can give you exposure to new businesses and growth trends.

"To me, diversification and growth are the two key advantages to owning new stocks," says Matthew Kennedy, senior IPO market strategist at Renaissance Capital. "Most popular index funds, including those that track the S&P 500, do not have many new stocks."

Renaissance Capital's analysis shows that companies in the S&P 500 have been trading for more than 40 years on average.

"Meanwhile, new stocks are often pure-plays on some of the most cutting-edge technologies and growth concepts," Kennedy says.

This can make IPOs a way of broadening your portfolio, but it doesn't mean buying an IPO automatically makes you diversified. You're still buying an individual stock with company-specific risks.

Another potential advantage comes if you can buy shares at the IPO price before public trading begins. Since 1980, the average first-day gain on IPOs is 19%, according to research (PDF) by Jay Ritter, director of the IPO Initiative and professor emeritus of finance at the University of Florida's Warrington College of Business.

But "possibility" is doing a lot of work there. Getting shares in the most popular IPOs can be hard, and a first-day gain is far from guaranteed.

What are the cons of investing in an IPO?

The same qualities that make IPOs exciting also make them difficult to evaluate.

"IPOs don't have a trading history," Kennedy says. "They don't have a management team with a public track record of setting and meeting expectations."

What they often do have in spades is hype, but this can do more harm than good for long-term investors. "Great excitement can result in overvaluation, so that even great companies become so overvalued they have little upside," Kennedy says.

Nor does every IPO enjoy the first-day price "pop." In fact, since 1980, about 24% of IPOs have fallen on the first trading day, according to Ritter's research.

It's also generally easier to get shares in IPOs that drop on the first day than ones that pop because the poppers typically have a lot more demand, Ritter says.

Management teams can be very strategic about when they choose to go public, according to Kennedy: "You may be seeing a business that's benefitting from tailwinds that are ultimately unsustainable."

Historically, IPOs have also underperformed the broader market in the first three years after going public for investors who bought at the market price on the first day of trading, Ritter says.

There's an important distinction to make, though: Since the 1980s, IPOs from companies with more than $100 million in annual revenue produced an average three-year buy-and-hold return of 36.4%, whereas those with annual revenue less than $100 million returned just 5.3%, according to Ritter.

So, "revenue is a better predictor of future returns than profitability," he says.

How to evaluate an IPO before you buy

If after knowing all the pros and cons, you still want to buy an IPO, the next step is to understand how to tell a good prospect from a bad one. The IPO prospectus is a wise place to start. It won't tell you how the stock will perform once trading begins, but it can tell you a lot about the business you're actually buying.

"Strong growth, expanding margins and a solid balance sheet," are the three characteristics Kennedy generally looks for, although he adds that a successful investment doesn't necessarily need all three. He also recommends digging into management's discussion and analysis, or MD&A, rather than relying only on the full-year numbers.

"Sometimes you'll find a company with a good fiscal year, but problems emerge when you drill into the latest quarters," he says.

Since many IPOs have little or no profit, Kennedy often uses sales and adjusted EBITDA instead of traditional price-to-earnings ratios.

Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, is "very useful as an apples-to-apples operating margin, but investors should always double-check how the company is calculating it, and what the actual free cash flow looks like," he says. "Since adjusted EBITDA is not GAAP, companies can sometimes be aggressive with add-backs."

Ritter also favors price-to-sales (P/S), which compares a stock's price to a company's sales.

SpaceX (SPCX) provides an extreme example. The company went public in June at a P/S ratio above 90, according to Ritter.

"At such a high ratio, almost everything has to go right for SpaceX to grow its revenue and profits enough to justify such a high valuation," he says. The higher the valuation, the more future growth investors are already paying for and the less room the company has to disappoint.

Ritter has one more red flag: Stay away from IPOs priced at $5 per share or less. "These IPOs have generally been a disaster for investors," he says.

How to invest in an IPO

Once you've identified a good IPO prospect, the path gets technical. There are two basic ways to invest in an IPO: Try to get shares at the IPO offer price or wait until the stock begins trading publicly.

Some brokerage firms give eligible customers access to IPOs before trading begins. But requesting shares doesn't mean you'll receive them, especially in popular offerings.

Also keep in mind that many brokerage firms have policies to discourage selling on the first day or shortly thereafter. If you do sell shortly after trading, you may be locked out of future IPOs.

The easier way to invest in an IPO is to simply wait until trading begins. Then, you can buy shares through your brokerage firm as you would any other stock. You may pay more or less than the IPO price, but you won't have to compete for an allocation.

That said, "no one needs to buy on day one," Kennedy says. He recommends deciding what you're willing to pay before trading starts, rather than letting headlines or fear of missing out set the price for you.

Instead of chasing the hype, you can put the stock on a watchlist and continue following its valuation and results.

Ultimately, "investing in a company going public should be treated no differently than investing in any other individual stock," Ritter says. This means looking beyond the headlines to the company's financial health, prospects and valuation, and being willing to walk away when the price doesn't make sense.

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Chip stocks caught bids for the first time in 10 trading sessions on Monday, though the main equity indexes were mixed as Treasury yields resumed their climb. It's relatively quiet as far as incoming economic data this week. But markets have plenty of fresh information to consider, with two of the Magnificent 7 stocks set to report third-quarter operating and financial numbers.

At the closing bell, the tech-heavy Nasdaq Composite was up 1.1% at 26,430, and the broad-based S&P 500 had added 0.4% to 7,690. But the blue-chip Dow Jones Industrial Average was lower by 0.07% at 51,966.

Consumer discretionary stocks and tech stocks posted outsized gains amid a relatively narrow rally, while the VanEck Semiconductor ETF (SMH, +1.6%) posted a positive intraday return for the first time since October 5.

Nvidia (NVDA, +1.4%) was well in the green, while fellow Magnificent 7 stocks Meta Platforms (META, -0.6%) and Tesla (TSLA, +3.8%) prepare to offer the market the first look at the trend-setting group's recent results after the closing bell on Wednesday.

"Despite the pullback in the AI trade, the S&P 500 ended last week only 2% below its all-time high," E*TRADE from Morgan Stanley Managing Director Chris Larkin observes. "With a light economic calendar this week, traders should be more focused on earnings, but as has been the case for the past few weeks, oil prices and Treasury yields will likely play a major role in market sentiment."

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The 2-year Treasury yield was up 3.6 basis points to 4.772%, while yields on the 10-year (+4.4 bps, 5.142%) and the 30-year (+3.9 bps, 5.476%) also popped again on Monday. The front-month West Texas Intermediate crude oil futures contract, meanwhile, declined by 0.7% to $98.38 per barrel from $101.41 on Friday.

Like Larkin, Louis Navellier of Navellier & Associates would rather focus on earnings: "I am expecting 33% average third-quarter earnings growth for the S&P 500. It is literally impossible to be bearish in the midst of such stunning earnings announcements, so please enjoy the ride."

Why AMZN is a "Top Pick"

Amazon (AMZN, +5.0%) was No. 1 among the 30 Dow Jones stocks on Monday after Morgan Stanley named it a "Top Pick" based on a favorable risk-reward profile, as well as five catalysts for as much as 40% upside from its closing price on Friday.

According to analyst Brian Nowak, Amazon Web Services will continue to deliver outsize top-line growth on its way to $1 trillion in revenue. AWS growth will, in turn, support earnings power. Its Bedrock service is well-placed to drive generative AI across the economy and is "a potential multiple expander."

Amazon also enjoys competitive advantages when it comes to agentic AI. And the e-commerce giant is emerging as a physical AI winner, too, with efficient adoption of robotics at its fulfillment centers.

Nowak reiterated his Overweight (Buy) rating and raised his 12-month target price from $335 to $350, noting a three-to-one risk-reward ratio based on a downside "bear skew" to $220.

The analyst also cites the bigger top line for AWS, as well as Amazon's "ability to operate as a 'rule of 90' company," which means the sum of its annual revenue growth rate and its profit margin is equal to or greater than 90%.

INTC gets an upgrade

Intel (INTC, +2.4%) traded up to $142.35 intraday and closed at $139.63 on June 30. The semiconductor stock closed at $89.85 on Friday, almost 40% from its recent highs.

That was enough for J.P. Morgan analyst Harlan Sur to upgrade the chipmaker to Neutral (Hold) from Underperform (Sell). The analyst maintained his 12-month target price of $85, as the risk-reward for INTC now "is much more balanced."

Sur notes concerns about the sustainability of AI infrastructure spending, but he says "increasing agentic AI workloads (CPU intensive) and a very tight supply chain for leading edge silicon should drive continued positive" earnings revisions when management reports third-quarter results on October 29 and through 2027.

According to S&P Global, 15 Wall Street analysts have Buy ratings on INTC, vs 33 who rate the AI stock a Hold, and now just one who says it's a Sell. The average 12-month target price is $118.05.

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To help you understand the trends surrounding business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

There’s no shortage of comments from tech leaders about the transformative potential of artificial intelligence. But with AI spending surpassing the level of previous major infrastructure projects, including railroads, electricity and the internet, it’s become more important to consider how the biggest spenders understand the AI buildout.

Here’s what tech executives have said about the risks in interviews, panels, earnings calls and shareholder letters. (Some quotes have been lightly edited for concision and readability.)

On the risk of a bubble

Dario Amodei, CEO of Anthropic: "I think there is a real underlying risk. Whenever there’s uncertainty, there’s a risk of overextension. We all face it. I face it. All the other companies face it. There’s an inherent risk when the timing of the economic value is uncertain. There’s an inherent risk of underreacting or overextension. And because companies are competing with each other and, frankly, we genuinely need to compete with, you know, our authoritarian adversaries, there’s kind of a lot of pressure to push things." (12/3/25)

Andy Jassy, CEO of Amazon: "Every customer experience will be reinvented by AI, and there will be a slew of new experiences only possible because of AI. I’ve followed the public debate on whether this technology is over-hyped, whether we’re in 'a bubble,' and if the margins and [return on invested capital] will be appealing. My strong conviction, at least for Amazon, is that the answers are no, no, and yes." (4/9/26)

Satya Nadella, CEO of Microsoft: "For this not to be a bubble, by definition it requires that the benefits of this are much more evenly spread. I think a telltale sign of if it’s a bubble would be if all we’re talking about are the tech firms. If all we talk about is what’s happening to the technology, then that’s just purely supply-side. Ultimately, if we’re not talking about, ‘Wow, here is a drug that was sort of brought into the market that’s super successful because it was AI accelerated in the clinical trial.’ And by the way, it’s happening." (1/20/26)

Mark Zuckerberg, CEO of Meta: "I think basically if you look at most other major infrastructure build-ups in history, whether it's railroads or fiber for the internet, in the dot-com bubble, these things were all chasing something that ended up being fundamentally very valuable. In most cases, it ended up being even more valuable than the people who were pushing the bubble thought it was going to be. But in at least all of these past cases, the infrastructure gets built out, people take on too much debt, and then you hit some blip, whether it's some macroeconomic thing or maybe you just have like a couple of years where the demand for the product doesn't quite materialize. And then a lot of the companies end up going out of business." (9/18/25)

Sam Altman, CEO of OpenAI: "I'm not worried about our compute buildout plans. I am worried about the world's compute buildout plans. I think we are going to be able to use all of the compute very profitably that we are planning to build. But I am seeing the first signs of what feels to me like unsustainable silliness of random, new neocloud popping up, people claiming that they're going to build gigantic amounts of compute next year that I think they don't have the revenue to support or a buyer. Yeah, I definitely feel like some fear of what the world is doing as a whole. Although I think we feel very good about what we've committed to." (9/1/26)

Jeff Bezos, founder and executive chairman of Amazon: "This is a kind of industrial bubble, as opposed to financial bubbles. And I'll tell you what I mean by that. If you go back, like the '90s had a biotech bubble and there were a bunch of pharma start-up companies that were designing drugs and using new techniques and the world got very excited. The investment world got very excited. As a group, they all lost money. But we did get a couple of life-saving drugs." (11/3/25)

Bill Gates, founder of Microsoft: "We need to define bubble. If what we mean is like Tulips in the Netherlands, that they eventually looked back and said, 'What the heck? There was nothing there. Those were just tulips.' No, that’s not where we are. If you mean it’s like the internet bubble where in the end something very profound happened, the world was very different. Some companies succeeded, but a lot of companies were kind of 'me, too,' fell behind, burning capital. Absolutely, there are a ton of these investments that will be dead ends." (11/28/25)

On massive AI spending

Sundar Pichai, CEO of Alphabet: "The one way I think about it is when you go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting for us here. Even in scenarios where it turns out we are overinvesting, these are infrastructure projects that are widely useful for us, they have long useful lives, and we can apply it across and we can work through that." (7/23/24)

Andy Jassy: "We have customer commitments that make our capex investments predictable. We’re not investing approximately $200 billion in capex in 2026 on a hunch. We are willing to make large capex investments and endure short-term [free cash flow] headwinds for the substantial medium- to long-term FCF surplus. AI is a once-in-a-lifetime opportunity where the current growth is unprecedented and the future growth even bigger." (4/9/26)

Mark Zuckerberg: "If we end up misspending a couple of hundred billion dollars, I think that that is going to be very unfortunate, obviously. But what I'd say is I actually think the risk is higher on the other side. If you build too slowly, and then superintelligence is possible in three years, but you built it out assuming it would be there in five years, then you’re just out of position on what I think is going to be the most important technology that enables the most new products and innovation and value creation in history." (9/18/25)

Dario Amodei: "I think there’s a real dilemma deriving from uncertainty in how quickly the economic value is going to grow and the lag times on building the data centers that drives this. So I think there’s genuine uncertainty. There’s a genuine dilemma, which we as a company try to manage as responsibly as we can. And then I think there are some players who, you know, who are YOLO-ing, who pull the risk dial too far and I’m very concerned." (12/3/25)

Sam Altman: "In terms of being able to confidently pay for the compute we are committed to, I feel good about that. I think people right now are kind of in a, 'cost is no object, we’re just going to build out crazy amounts of compute, somebody will pay me a higher price.' And if we are able to succeed with our efforts to hugely drive down the cost of compute and the efficiency of compute up a lot, then, you know, you can imagine a world where there are some people that made dumb financial decisions. That happens in kind of like every boom, or most of them." (9/1/26)

On potential fallout

Satya Nadella: "This is a new general-purpose technology that is going to drive productivity and that productivity has to translate into very broad-based economic growth that is economy-wide, in terms of GDP growth. And if we don’t see that, then we are going to have a problem. Unless we see that broad economic growth, then we’re not going to have this movie end well. We are in the early innings of it, but there are real proof points of that." (7/26/26)

Mark Zuckerberg: "There are compelling arguments for why AI could be an outlier [versus previous bubbles]. And basically just if the models keep on growing in capability year over year and demand keeps growing, then maybe there is no collapse or something. But I do think that there’s definitely a possibility, at least empirically, based on past large infrastructure buildouts and how they led to bubbles, that something like that would happen here." (9/18/25)

Dario Amodei: "Building the data centers has a long lag time. It’s like a year or two. So I have to decide now, literally now or, in some cases a few months ago, how much compute I need to buy in, you know, early 2024 to serve the models in early 2027 when I get to that revenue amount. And there are two coupled dangers. One is that if I don’t buy enough compute, I won’t be able to serve all the customers I want. I’ll have to turn them away and send them to my competitors. If I buy too much compute, of course, I might not get enough revenue to pay for that compute. And, you know, in the extreme case, there’s kind of the risk of going bankrupt." (12/3/25)

Jeff Bezos: "When people get very excited, as they are today about artificial intelligence, for example, every experiment gets funded. Every company gets funded. The good ideas and the bad ideas. And investors have a hard time in the middle of this excitement, distinguishing between the good ideas and the bad ideas. And so that's also probably happening today. But it doesn't mean that anything that's happening isn't real. Like AI is real and it is going to change every industry. In fact, it's a very unusual technology in that regard, in that it's a horizontal enabling layer." (11/3/25)

Bill Gates: "You have a frenzy and you know some of these companies will be glad they spent all this money. Some of them, you know, will commit to data centers whose electricity is too expensive, that it could be done overseas. Or they'll buy a generation of chips and they won't have captured all their value before the next one comes along. But if you want to be a tech company, you don't get to say no, let's check out of this race." (11/28/25)

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Here's a head-scratcher: iShares Core Dividend (DIVB), a dividend-focused exchange-traded fund (ETF) that we recently added to the Kiplinger ETF 20, gained 36% over the past 12 months through August, handily beating the 20% return in the S&P 500 over the same period. (Since June 30, when we added the ETF to the Kip ETF 20 roster, the fund has climbed nearly 12%, well ahead of the S&P 500, which has risen 3%.)

The index fund targets stocks in U.S. companies that pay the fattest dividends and buy back the biggest number of shares by dollar value. It holds roughly 380 stocks and yields 2.9%.

At last report, the fund's top holdings — International Business Machines (IBM), Automated Data Processing (ADP), Accenture (ACN) and Paychex (PAYX) — bore no resemblance to the top stocks in the S&P 500: Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN) and Alphabet (GOOGL). That's a plus in our view.

That said, tech shares, such as Cisco Systems (CSCO) and Dell Technologies (DELL), played a role in the fund's superior performance earlier this year. (The fund reconstitutes every June, and those stocks are no longer in the portfolio.)

Energy stocks, boosted by higher oil prices amid tension in the Middle East, helped too. Top-10 stock Exxon Mobil (XOM) has climbed 26% since the start of the year.

A leader among peers

Core Dividend's long-term record sparkles as well. The ETF's annualized return over the past five years, 14%, ranks among the top 7% of its peer group (funds that focus on large-company stocks trading at bargain prices), and it beats the gain in the S&P 500.

The portfolio skews more toward growth-oriented sectors than its peer ETFs do. According to financial data firm Morningstar, tech stocks make up 33% of the portfolio, nearly double the exposure to that sector in the typical large-value fund.

But Core Dividend also holds a chunk of assets in sectors that tilt toward value, such as energy, financial services and healthcare.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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The main equity indexes slumped again on Friday, as semiconductor stocks sold off for a ninth straight trading session. Federal Reserve Chair Kevin Warsh shed only a little light on the central bank's upcoming decision on interest rates at an event in Asia. But he did heap a lot of praise on the potential upside for the broader economy from the artificial intelligence (AI) boom.

Still, CoreWeave (CRWV, -11.9%) remains a focal point, as investors, traders and speculators fixate on capex spending and whether what we're seeing instead is an AI bubble.

The VanEck Semiconductor ETF (SMH, -3.4%) extended its two-week losing streak, as Nvidia (NVDA, -1.4%) rallied into the green around noon but slumped after midday. Tech stocks, as well as AI stocks, generally dragged on the main equity indexes.

By the closing bell, the blue-chip Dow Jones Industrial Average, reversing early gains supported by rotation into energy and risk-off sectors such as consumer staples stocks, was down 0.3% to 52,002. Papa Dow held on for a 0.7% gain this week.

The broader S&P 500 slid 1.1% to 7,659, extending its weekly loss to 1.9%. And the Nasdaq Composite shed 2.1% to 26,140, as the tech-heavy index fell 4.5% from where it was last Friday.

The 2-year Treasury yield was down 3.0 basis points to 4.721%, as the short-term proxy for monetary policy traded in a wide range. Yields on the 10-year (+0.2 bps, 5.089%) and the 30-year (+0.7 bps, 5.435%) also moved up and down a lot on Friday.

'One Night in Bangkok' featuring Fed head Kevin Warsh

Warsh said little about the target range for the federal funds rate during an overnight "fireside chat" at the International Monetary Fund and World Bank Group annual meeting in Bangkok, Thailand.

While he was talking, though, equity index futures bounced to session highs, bond yields backed off a little more and the probability the Federal Open Market Committee (FOMC) will keep its policy rate unchanged at its late October meeting ticked up to 85.1% from 72.3% on Thursday.

That's according to CME FedWatch, which tracks price action in the 30-day fed funds futures market.

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"We removed a dose of accommodation about a month ago," Warsh said, referring to the 25-basis-point cut at the September Fed meeting. "I don't prejudge meetings. I don't believe in saying now what I might do at the meetings we have in the balance of the year."

Warsh also called AI "probably the most consequential change to the U.S. and the global economy in my lifetime. If you're a central banker and you're in the business of trying to ensure stable prices and full employment, you've got to recognize this as a shock."

Indeed, according to the Fed chair, AI will "fundamentally change the conduct of monetary policy."

With the official "blackout period" around its next policy decision starting tomorrow, that's the last we'll hear from the Fed until the conclusion of the next FOMC meeting on Wednesday, October 28.

Netflix needs a hit

Netflix (NFLX, -2.9%) announced its biggest layoffs since 2022 earlier this week, but naming a new chief content officer is probably a more important potential long-term catalyst for the communication services stock.

With NFLX down more than 15% year to date through Thursday, management is scheduled to report third-quarter results after the closing bell on Tuesday.

The stock has stagnated because of stale content that's left it struggling for engagement in an extremely competitive environment.

Co-CEOs Greg Peters and Ted Sarandos said in an internal memo that Netflix will be "disciplined about where we prioritize our people and resources" and focus on "high impact areas to improve our service."

For investors, that probably means a credible plan from the new management team to recapture eyeballs.

Flying car stock falls 2%

It's not the percentage part. It's the fact that the Magnificent 7 stock was down at all on the day Tesla (TSLA, -2.1%) introduced its Roadster, arguably the world's first flying car.

Say what you will about CEO Elon Musk and the grandiosity of his SpaceX (SPCX, -1.7%) project. This is the world's first flying car, people. "The Jetsons!" Right?

Well, actually, it's one thing to build a mind-blowing flying car, but another to introduce it when investors and traders, even speculators and policymakers, are focused on exploding capex and hyperscaler impact on the bond market.

Indeed, as Fed Chair Warsh acknowledged today, AI will boost central banks' ability to analyze data. It will also change the real economy, improve productivity and wealth.

At the same time, he cautioned, it's going to be a bumpy ride.

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Price action in the fixed-income market suggested bonds are in the process of finding a bottom, even as incoming data indicated inflation remains a problem. At the same time, during yet another difficult day for technology, the three main stock indexes rallied for modest gains on Wednesday.

By the closing bell, the blue-chip Dow Jones Industrial Average had added 1.1% to 52,177, the broad-based S&P 500 was up 0.3% at 7,744, and the tech-heavy Nasdaq Composite had rallied for a 0.08% gain to 26,713.

"As horrific as the PPI was," Louis Navellier of Navellier & Associates says, "believe it or not, Treasury yields actually declined on the perception that this may be the peak in the poor inflation news."

Indeed, the 2-year Treasury yield was down 4.5 basis points to 4.757%, while the 10-year (-9.9 bps, 5.091%) and the 30-year (-9.3 bps, 5.431%) pulled back even further.

As Navellier notes, Taiwan Semiconductor Manufacturing (TSM, -1,7%) reported 51% top-line growth and 59% bottom-line growth for its third quarter. Management also raised its full-year guidance.

Still, Nvidia (NVDA, -1.8%) was down again, as was the VanEck Semiconductor ETF (SMH, -1.0%) — the exchange-traded fund's eighth straight loss.

"A lot of market pundits think that stocks are priced for perfection," Navellier writes, "but I remain confident that when the third-quarter announcement season winds down, the S&P 500's earnings will be up at least 33%."

The Fed has 'work to do'

The Bureau of Labor Statistics (BLS) said before the opening bell that the Producer Price Index (PPI) rose by 1.3% in September, more than double a FactSet-compiled consensus forecast for 0.5% month-over-month acceleration. PPI was up to 6.3% from 5.6% compared to September 2025.

"PPI inflation was higher than expected in September as energy prices surged and food prices rose," Fifth Third Commercial Bank Chief U.S. Economist Bill Adams observes. "Core inflation exceeded forecasts, too."

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A red-hot September CPI report and today's PPI data "show no sign of inflation moving back to the Fed's target," Adams concludes, "leaving the central bank with 'more work to do,' to borrow Chair Warsh's phrase from his Jackson Hole speech in August."

Nike tops the Dow

Nike (NKE, +5.3%) is now the smallest of the Dow Jones stocks, and it's the worst performer of the 30 so far this year. But that didn't stop the sneaker company from leading the index on Thursday.

NKE was down 78.2% from an all-time closing high of $161.91 on November 5, 2021, to $35.30 at the end of regular trading on Wednesday, presenting what looks like a bargain to many investors, traders and speculators.

Indeed, the iconic athleisure brand has bounced off an intraday low of $31.97, plumbed on October 2 in the aftermath of a less-than-stellar fiscal 2027 first-quarter earnings report.

Perhaps what was once the consummate consumer discretionary stock will find its way to lists of the best value stocks to buy, perhaps not.

Wall Street remains skeptical about Nike's turnaround, with 10 analysts rating the stock a Buy, 25 calling it a Hold and seven saying it's a Sell. The average 12-month target price is $37.88, upside of 1.9% from NKE's closing price on Thursday.

Why we need to talk about CoreWeave

CoreWeave (CRWV, +5.9%), which completed one of the biggest IPOs of 2025 on the back of its AI cloud platform, has become the focal point for broad market concern about the health of the current industrial revolution.

CRWV has fallen about 64% from its June 20, 2025, all-time high, as questions about returns on the capex fueling the boom have mounted amid rising debt, spiking bond yields and growing perception of the risks of an AI bubble.

But Deutsche Bank analyst Brad Zelnick reiterated his Buy rating and his $150 12-month target price for the tech stock on Thursday and said recent price action presents an opportunity.

"A confluence of factors appear to have led to a sharp selloff in CoreWeave's public equity and debt over the past week," Zelnick writes. "There's no doubt CoreWeave's future is tied to the success of AI and demand for the underlying compute infrastructure supporting it, and thus its shares should reflect changes in sentiment here."

CRWV gapped down at Thursday's open, but rallied through the session to post a solid gain. "A strong customer base, established record of execution, backlog conversion and leading infrastructure performance is all supportive of their issuer profile relative to neocloud peers," Zelnick concludes.

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With growing excitement around IPOs such as SpaceX and ongoing speculation about others, many investors are asking the same question: How can I get in on the action?

While chasing the newest investment opportunity might be tempting, building wealth rarely happens through one hot IPO, a trending stock or the latest market craze.

The most successful investors rarely get caught up in hype. They follow a disciplined process rather than searching for shortcuts.

The danger of chasing the hot, new investment

When investors hop on a highly anticipated company, early enthusiasm can push prices far beyond what the business is actually worth.

This can create that fear-of-missing-out (FOMO) feeling, as investors get in early and make money while others eagerly wait their turn.

But chasing hype can be risky. What looks like a quick win can just as quickly turn into a painful lesson once the initial excitement fades and the investment's true value becomes clearer.

A good example is Rivian. Many investors believed they were buying when the hype had settled, but even purchases that appeared to be on the dip resulted in significant losses as valuations continued to fall.

It often takes months or even years for the market to determine a company's true value.

Consistency is the name of the investing game

There's nothing wrong with wanting a piece of the pie when it comes to investing. The problem is when investors begin to view some of these opportunities as shortcuts to wealth.

Everyone is looking for the next big winner that will magically get them to retirement faster, but contrary to popular belief, wealth building isn't complicated.

I like to compare it with a new fad diet promising dramatic results. The people who are successful in losing weight or maintaining good health typically follow the same principles: Eat well, exercise consistently and stick to a routine.

The same is true about investing. Just as you can't junk-food your way to good health, you can't junk-invest your way to a secure retirement.

The three keys to long-term retirement success

Investors who build meaningful wealth focus on three things:

Consistent contributions. The most reliable way to build wealth is not by trying to guess which shiny new idea will take off next, but to consistently invest over time. Regular contributions allow investors to benefit from market ups and downs. Dollar-cost averaging removes the pressure of trying to time the market. They keep investing regardless of what the headlines say.

Time in the market. Successful investors give their money time to grow. Compound interest is one of the most powerful tools in investing, but it requires patience. Wealth accumulation can feel slow at first, but it accelerates over time. The earlier you start, the greater the potential payout.

Risk management. For your money to grow, it requires a certain level of exposure to growth assets. While market volatility can be tough to stomach at times, avoiding risk entirely can make it difficult to achieve the returns needed to meet long-term goals. Investors should take on as much risk as they can reasonably tolerate.

A good retirement strategy is not about hitting home runs. It's about creating a system that works over years and decades. That means saving consistently, staying invested and choosing the right mix of investments that fits your risk tolerance and time horizon.

When to dial back risk

Risk is largely based on your time horizon, or how far you are from retirement. If you're early in your career, your focus should remain largely growth-oriented. Major market swings have less of an impact when time is on your side.

If you're about 10 years from retirement, you should start taking a closer look at your future spending, retirement income needs and overall strategy.

If you're about five years from retirement, begin balancing growth opportunities with greater protection of the assets you've worked to accumulate.

This is the stage in life that we specialize in at Blue Ridge Wealth Planners. We help clients optimize their retirement by implementing strategies to help preserve their assets and generate lifelong income. The goal shifts from building wealth to preserving and distributing it effectively.

That doesn't mean abandoning growth entirely. It means making sure your portfolio aligns with your timeline and goals.

How to handle 'hot' investment opportunities

How should investors respond when a hot new opportunity dominates the headlines?

Ask yourself:

• Does this investment fit my overall plan?
• Am I investing because of the company's fundamentals or because everyone is talking about it?
• What happens if this investment loses significant value?

Start by reminding yourself what has always been true. Exciting investments will come and go. Some will succeed and some won't. Predicting which is which is often much harder than it appears.

If you're interested in a particular company or industry, there might be other ways to gain exposure through diversified investments, such as ETFs, rather than relying on a single company to carry your entire portfolio.

In the end: Trust the process

Don't let the pursuit of a shortcut distract you from the process that works. Building wealth is rarely exciting. It usually consists of saving consistently, investing wisely, managing risk appropriately and staying committed regardless of market conditions.

You don't need to find the next SpaceX to reach your financial goals. Trust the process and remain disciplined long enough for it to work.

Blue Ridge Wealth Planners is an investment adviser registered with the Securities and Exchange Commission. SEC registration is not an endorsement by the SEC nor does it imply a certain level of skill or training.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Treasury yields surged and equity indexes sank after the government said consumer prices rose last month at a faster clip than Wall Street forecast. Technology and other sectors closely connected to the artificial intelligence (AI) revolution reflected today's sharp risk-off turn, as healthcare, consumer staples and energy stocks caught bids.

The 2-year Treasury yield (+1.5 bps, 4.808%) spiked more than 10 basis points within minutes of the release of a red-hot September CPI report, but eased back through Wednesday's trading session. "On balance," Barclays economist Pooja Sriram writes, "this morning's inflation data are unlikely to provide much comfort to policymakers."

Sriram says risks economists "have flagged for some time, including energy pass​-​through into core prices, resilient consumer spending, and AI​-​related price pressures" are becoming bigger factors in the price stability equation.

As the economist concludes, "Although favorable base effects should mechanically lower annual inflation rates next year, the recent run of prints casts doubt on how much progress is being made on underlying inflation."

The 10-year Treasury yield (-2.7 bps, 5.19%) and the 30-year Treasury yield (-4.6 bps, 5.517%) were lower at the end of a volatile session in the bond market. CME FedWatch now shows a 34.9% probability of a 25-bps rate hike at the conclusion of the October 27-28 Federal Reserve meeting, up from 22.1% on Tuesday.

Investors, traders and speculators will turn their attention to the release of September's Producer Price Index (PPI) and retail sales data before Thursday's opening bell for the next clues on interest rates and monetary policy.

ASML sends a risk-off signal

By the closing bell, the Nasdaq Composite had taken a 1.9% tumble to 26,692, the tech-heavy index anchored by a seventh straight losing session for chipmakers on a mixed earnings calendar showing from one of the industry's overseas stalwarts.

The broad-based S&P 500 was down 1.1% to 7,719, and the blue-chip Dow Jones Industrial Average had slipped 0.09% to 51,622, as other groups boosted by the AI buildout reflected the macro mood.

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Netherlands-based ASML (ASML, -3.9%) reported a 47% increase in third-quarter revenue and 127% earnings growth, just missing on the top but easily beating on the bottom line. Management raised fourth-quarter sales guidance, too.

ASML also said it would struggle to meet demand for its chips in 2027 and 2028, indicating a healthy order backlog that should signal good things for semiconductor stocks.

Alas, Nvidia (NVDA, -3.2%) was among the worst Dow Jones stocks on Wednesday, joined by Caterpillar (CAT, -3.1%). The industrial stock is among those names, beyond tech and communication services stocks, benefiting from AI-driven demand.

Amid broader curiosity about the trajectory of the federal funds rate, markets seem wary of any and all kinds of open questions, even (perhaps especially) as they relate to growth expectations.

“Uncertainties around ASML's ability to ship DUV [deep ultraviolet lithography] tools to China remains a hot topic with investors," BofA Securities analyst Didier Scemama wrote ahead of ASML's report. "However, we think this is likely largely baked in the stock."

Scemama reiterated his Buy rating and his $2,915 12-month price target on ASML's American Depositary Receipt (ADR), which closed at $1,650 on Wednesday.

Bank of America pays up

Bank of America (BAC, -4.7%), because of a potential positive impact on net interest margin, is among the best stocks to buy for rising interest rates this fall.

The big bank also looks like a big bargain after BAC suffered its worst post-earnings share-price decline since the early aftermath of the global financial crisis more than a decade and a half ago.

As Jefferies analyst David Chiaverini notes, the Treasury Department announced a $1.2 billion fine on Bank of America for violations of anti-money laundering rules previously identified in a December 2024 consent order.

The fine resulted in a 17-cent-per-share hit to BAC's bottom line. But Chiaverini, who has a Buy rating on BAC and considers the financial stock a "Franchise Pick," now sees upside from here of about 36% based on his 12-month target price of $70.

"While the charge is a meaningful one-time hit," the analyst observes, "we believe remediation costs are largely embedded in the current expense base. The key debate is how long the consent order could be in place and the extent to which it could impede operations, if at all."

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To help you understand the trends surrounding business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

Artificial intelligence will be transformational, akin to the dawn of the internet, but unfolding at a faster pace. But overspending on AI is creating a bubble, in our judgment, like other major industrial projects in history, such as railroads, electrification or the web.

Here’s how we currently see the state of play.

AI outpaces previous building booms

AI is the largest infrastructure project ever. U.S. spending is double the dot-com peak, when the telecom and fiber build-out hit 1.2% of GDP in 2000, according to an analysis by the investment firm Apollo. AI is now at 2% of GDP and will soon be 3%.

Big Tech spending will hit $1 trillion next year in capital expenditures from Alphabet, Amazon, Meta and Microsoft, according to data compiled by Bloomberg. That’s up from $700 billion this year and $380 billion in 2025. Back in 2022, it was $150 billion. With big spenders Oracle and SpaceX, it’s even higher. Though the spending is expected to level off, there’s no end in sight for $1 trillion-plus yearly outlays.

Unlike previous infrastructure build-outs with up-front spending on things that lasted decades, AI spending resets every four to six years as high-priced AI chips in data centers need to be upgraded, along with other equipment.

And improving AI is getting more expensive, requiring more computation and electricity to develop leading-edge AI. New AI models can cost $1 billion. A huge, 1-gigawatt data center? $60 billion, according to Nvidia CEO Jensen Huang.

Some of the most significant risks

Among risks that bear watching: The drastic business shift of tech giants from high-margin software to capital-intensive infrastructure. Once fountains of cash, most of the top AI spenders will have negative free cash flow this year and in 2027. S&P Global doesn’t project a recovery of FCF for most major players until 2029, a timeline that would lead to mounting pressure and possible investor blowback.

Debt-fueled financing with increasingly complex structures, such as special-purpose vehicles, or SPVs, which get debt off Big Tech’s books. Recently, Nvidia spearheaded a plan with investment firms, such as BlackRock and Goldman Sachs, to unleash $500 billion in AI financing. The plan seeks to turn AI chips in a data center into an investable asset and highlights how the AI boom is being financed by unconventional means. BlackRock CEO Larry Fink compared it to the creation of mortgage-backed securities in the 1970s. Those MBS securities went on to play a leading role in the 2008 financial crisis.

The massive spending commitments. For example, Alphabet has $811 billion in obligations, mostly for AI. OpenAI has plans to spend $800 billion through 2030 to build some of the world’s biggest data centers in New Mexico, Texas, Wisconsin and Michigan. Flexibility may be hard to come by with multiyear deals for chips, power and land. Big Tech spenders are forecasting demand for AI years in advance, an inherently dicey proposition.

Circular deals, such as Nvidia financing the purchase of its own chips. For example, Nvidia is providing up to $105 billion in financing for an OpenAI data center in Ohio. Even with a torrent of cash from soaring chip sales, Nvidia can’t maintain the pace of its recent extensive dealmaking, according to a report by Morningstar’s PitchBook. Another example: Microsoft has a 25% stake in OpenAI, which accounts for 70% of Microsoft’s AI sales.

The collective action problem of tech executives, all willing to overspend in the pursuit of “superintelligence,” an ill-defined AI breakthrough. “The risk of underinvesting is dramatically greater than the risk of overinvesting,” said Sundar Pichai, the CEO of Alphabet, back in 2024. Four or five tech companies breaking the bank to build the most advanced AI is not viable over the long run. It would not be surprising if, eventually, the race results in two to three leading-edge providers.

Other risks include AI turning into a low-cost commodity, stemming from both efficiency gains and cheaper AI services, including Chinese models, flooding the market. That could lessen demand for the most advanced, premium-priced AI. A terror attack or other rogue event involving AI could spur regulations that slow down or restrict the technology in an onerous way. Or AI improvements could slow or stall, lessening the pressure to spend so heavily on developing new AI systems.

The arguments against a bubble

Many analysts take issue with bubble talk, since revenue is exploding at Anthropic, OpenAI and other firms. Tech giants such as Alphabet and Amazon have diversified global businesses that cater to both businesses and consumers, with massive amounts of revenue. Plus, demand for AI is vastly outpacing supply, even as businesses cope with high costs.

AI use has exploded among businesses and consumers as free chatbots from Meta, Alphabet and OpenAI have proliferated. OpenAI has 900 million active weekly users, plus over 50 million consumer subscribers, with plans starting at $8 per month. Anthropic has hundreds of thousands of paying business customers and is on track to make tens of billions of dollars in sales per year.

But the revenue earned from AI is still far from keeping up with the necessary computing’s soaring cost. For AI spending to be sustainable, the tech must expand beyond employee productivity software or even entire IT budgets. AI must disrupt and reshape entire industries, from manufacturing and financial services to health care and retail. Businesses would need to shift huge amounts of spending that they now devote to labor and funnel it to AI products and services.

Amid AI’s fast adoption, tech executives have acknowledged the risk of a bubble. For example, Amazon founder Jeff Bezos has called what’s happening an “industrial bubble,” where investor excitement leads to certain money-losing bets but also breakthrough ideas. Meta CEO Mark Zuckerberg has said that a bubble is “definitely a possibility,” like those stemming from major infrastructure projects of the past.

"I am worried about the world's compute build-out plans," said OpenAI CEO Sam Altman in an interview in early September. Altman sees the first signs of "unsustainable silliness" of certain AI cloud companies, known as neoclouds, that claim they will build “gigantic amounts of compute” without securing the needed financing or customers.

The bottlenecks to AI progress

There are likely bottlenecks that slow AI adoption by businesses and consumers, ranging from human behavior to regulatory issues. That friction is sure to delay the full potential of AI, including all the enhanced productivity it promises. For Big Tech spenders, such delays will be hard to endure as they seek higher revenue and profits.

Another issue not to be overlooked is the major roadblocks to AI deployment, especially accessing the needed power, along with shortages of chips, equipment and labor. Some analysts point to roadblocks as a built-in factor staving off a bubble, preventing too much development, too fast. But those roadblocks will be more evident over the long term rather than in the short run. The explosion of data center opposition is a real concern, but tech giants have ample data centers in the pipeline for now.

Bubbles fund breakthrough ideas

It’s not clear when a bubble would burst or deflate. A fallout could include AI start-ups going out of business and certain infrastructure providers facing lumbering debt loads. The Kiplinger Letter’s view is that a pullback in spending could spark a mild recession, as the tech bust did in 2001.

Still, overspending on AI will be useful, pouring money into valuable areas that lay the foundation for an economic leap. Promising areas include AI software that automates complex white-collar office tasks, AI models that accelerate drug discovery and AI coding tools that automate computer programming. The ultimate winners of the race may not be the heavy spenders of today, but future start-ups that launch new products and services enabled by AI.

But on the cusp of all this potential, there’s no doubt that uncertainty and financial risk are rising.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Stocks closed lower Tuesday as market participants took in a lackluster start to earnings season and looked ahead to Wednesday's key inflation update. A steep sell-off in several semiconductor stocks didn't help, with reports that China's CXMT is making progress on its memory chip designs putting pressure on this corner of the market.

At the close, the blue-chip Dow Jones Industrial Average was down 0.4% at 51,670 and the broader S&P 500 was 0.02% lower at 7,805. The tech-heavy Nasdaq Composite, meanwhile, shed 0.2% to 27,204 as mega-cap memory stocks, including SK Hynix (SKHY, -3.2%) and Micron Technology (MU, -3.6%), slumped.

Johnson & Johnson (JNJ) was the worst Dow Jones stock today, falling 5.7% after the drugmaker reported earnings. JNJ beat top- and bottom-line estimates for its third quarter, but sales in its medical devices division fell short of Wall Street's expectations due to the ongoing conflict in the Middle East.

There are "countries that still value and actually want premium healthcare systems, think Kuwait, UAE, Saudi Arabia," J&J Chief Financial Officer Joe Wolk told CNBC. "They pride themselves on having solid healthcare, very good healthcare. But their budgets now are being resourced and allocated towards defense."

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JPMorgan reports a double miss

Elsewhere on the earnings calendar, JPMorgan Chase (JPM, -0.9%) reported second-quarter earnings of $5.75 per share, up 13.4% year over year but below analysts' estimates. JPM's revenue of $50.2 billion also fell short of expectations.

"JPMorgan had a rare miss against expectations," says David Wagner, head of equity and portfolio manager at Aptus Capital Advisors. "Dimon called it another quarter of strong results, but gave few clues on the shortfall, which was partly securities losses, and he said the bank cut back on share repurchases in the quarter. The franchise still looks healthy, but the quality of the quarter was a step below what investors have come to expect."

Among the other big banks reporting, Wells Fargo (WFC, -3.1%) fell short on revenue, while Goldman Sachs (GS, -0.2%) and Citigroup (C, -5.6%) beat on both the top and bottom lines.

Bumble goes private in $1.3 billion deal

Bumble (BMBL) surged 56.6% today and is up 134% this week on news the dating app will be taken private by Ithaca Holdings in an all-cash deal valued at $1.3 billion.

The female-founded platform, which prioritized user safety, went public in 2021 and closed its first day with a market cap of $7.7 billion. It has been a downhill slide since then, with BMBL stock's current market value closer to $783 million.

"Bumble was founded on a simple belief: meaningful relationships are essential to a healthy, happy life. Today, that belief feels more important than ever," said Whitney Wolfe Herd, Bumble's founder and CEO, in the press release. "In Ithaca, we have found a partner who shares our vision, believes in our women-first mission, and is committed to investing in Bumble's future."

Inflation data is on deck

Earnings will remain in focus on Wednesday, with Bank of America (BAC, -1.1%) and Morgan Stanley (MS, -1.8%) among those reporting. But most of Wall Street's attention will be on the release of the September Consumer Price Index (CPI) report.

"The September CPI could determine whether the Fed's next hike is imminent, or simply still ahead," explain UBS Global Research economists. "An upside surprise, particularly in the core, could revive the October debate, both moving market pricing and influencing the decision itself," while a print closer to forecasts "would leave the Committee with room to wait."

According to CME Group FedWatch, futures traders are currently pricing in a 78% probability that the Federal Reserve keeps interest rates unchanged when it meets later this month. Odds for a December rate hike are at 70%.

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To help you understand what is going on in the technology and finance sector, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Federal regulators want to transform how investors trade public equities. The Securities and Exchange Commission (SEC) has unveiled a five-year "innovation exemption" allowing tokenized stocks to trade on public blockchains. Under the new policy, “Tokenized Securities Venues” operating automated market makers will receive relief from registering as traditional stock exchanges. Additionally, liquidity providers contributing proprietary capital will enjoy a temporary exemption from broker-dealer registration requirements.

Tokenization, the process of issuing and transferring traditional assets like stocks and bonds on blockchain, is seen as a way to potentially attract more investors and increase trading capabilities outside of regular stock market hours.

The New York Stock Exchange, Nasdaq and the London Stock Exchange are already planning to launch tokenized stocks. Crypto exchanges Coinbase and Kraken are also planning to offer them to customers. Several crypto exchanges, including Kraken and Robinhood, already offer tokenized stocks to customers in Europe.

Wall Street meets 24/7 markets

Blockchain-based equity markets will unlock unprecedented global trading liquidity. Retail and institutional investors will gain round-the-clock access to public stocks, instant settlement, and self-custody options. Supporters say tokenized stocks give investors more flexibility, allowing them to earn interest or take out instant loans using their shares at any hour. Automated software on blockchain could also pay dividends directly to shareholders, saving companies time and money on administrative costs.

By contrast, skeptics warn that continuous trading will create severe pricing risks. Financial policy experts caution that traditional market off-hours serve as a vital cooling-off period to prevent panic selling during sudden crises. More critically, early offshore platforms demonstrated how fragmented liquidity can severely distort asset values. Because various crypto exchanges issued isolated tokens without standardized redemption mechanisms or clear ties to underlying shares, traders could not easily perform arbitrage to close price gaps — causing stock tokens on some platforms to trade at up to four times, or 300% above, the real stock price on the NYSE or Nasdaq.

Regulatory watchdogs will face steep hurdles monitoring continuous stock markets. Critics argue that waiving standard exchange rules for digital venues weakens market oversight, making price manipulation harder to detect and reducing customer protections. Without traditional opening and closing bells, public companies will also have to rethink how they release earnings reports and major announcements, as market news will trigger immediate overnight price reactions before investors have time to digest the information.

Strict standards for tokenized shares

Crypto platforms will need to grant full shareholder rights to comply.

Under the SEC rules, tokenized shares must offer the same economic and governance protections as traditional stocks, including voting rights, dividend payouts and liquidation claims. The agency explicitly prohibited synthetic tokenized derivatives and security-based swaps. Furthermore, underlying public companies will receive advance notice and the power to object before third parties list tokenized versions of their shares.

Analysts expect major digital asset firms like Coinbase, Robinhood and Circle to emerge as early winners by expanding custody, tokenization infrastructure and stablecoin settlement.

Built-in guardrails for the blockchain trading pilot

Strict trading volume caps will govern the initial trial phase. The SEC framework restricts eligible assets to listed securities, capping Tier 1 stocks at 75 and 0.25% of the prior month’s average daily share volume and Tier 2 stocks at 250 and 2.5% of average daily volume. This means that for Nvidia (NVDA), one of the most highly traded shares and a Tier 1 stock, qualifying venues could facilitate trading in up to roughly 312,500 tokenized Nvidia shares per day. For comparison, Nvidia has an average volume of 126 million shares per day.

Additionally, venues are barred from hosting initial public offerings, extending margin leverage or executing trade lending during the exemption period. These restrictions will allow regulators to gather operational data on continuous trading without disrupting market stability.

The Kiplinger Letter has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up so you can make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Stocks closed mixed in Monday's quiet session. While the equity market was open, the bond market was closed for the Columbus Day and Indigenous Peoples' Day holidays. No earnings and economic reports were scheduled for release today, though the action picks up starting tomorrow.

At the close, the blue-chip Dow Jones Industrial Average was up 0.4% at 51,850, as Salesforce (CRM) climbed 2.1% on a double upgrade from BofA Securities analyst Tal Liani.

Liani lifted his rating on the Dow Jones stock to Buy from Underperform, the equivalent of Sell, and raised his price target to $285 from $160. Salesforce, which is down 12% year to date, hasn't traded near $285 since May 2025.

"Our prior concern centered on AI-driven disintermediation," writes Liani in a note to clients. "However, conversations with CIOs and other market participants suggest that large enterprises (more than small-to-medium-sized businesses) are unlikely to replace platforms that house their business logic, data, workflows and compliance frameworks."

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And AI, Liani adds, "should deepen dependence on these platforms." He believes that Salesforce has a credible AI strategy and is poised for strong free cash flow generation.

The bull market celebrates its fourth anniversary

The broader S&P 500 (-0.06% at 7,807) and tech-heavy Nasdaq Composite (-0.4% at 27,245), meanwhile, finished slightly lower Monday.

The Dow is roughly 4.5% below its record high from early August, while the S&P 500 and Nasdaq are perched not far from the all-time peaks they notched last week.

Today marked the fourth anniversary of the current bull market. The S&P 500 has gained roughly 118% on a price return basis, "surpassing the historical average of ~90% and ranking as the third-strongest bull market since 1945. Along the way, it has produced 124 record highs, more than double the average (~50) of the seven prior bull markets that lasted at least four years," says Raymond James Chief Investment Officer Larry Adam.

Adam adds that volatility has remained below average over the past four years, while earnings growth, rather than multiple expansion, has fueled the bull market's returns.

And history suggests there's more room to run. According to Adam, the average bull market lasts about five and a half years, with the fifth year averaging roughly 15% annually and finishing positive 90% of the time.

This week's inflation data could spark volatility

And while today's price action was relatively muted, "this week's inflation data could be a near-term volatility trigger," says Chris Larkin, managing director of Trading and Investing at E*TRADE from Morgan Stanley.

First up is the September Consumer Price Index (CPI) report, which will be released Wednesday morning. Headline inflation was "uncomfortably high" in August, writes David Payne, staff economist and reporter for The Kiplinger Letter, in the Kiplinger inflation outlook. The pickup was caused by higher gas and fuel oil prices, shelter costs and airfares, he explains.

And with energy costs likely to stay elevated as the situation in the Middle East remains unresolved, Payne believes the annual CPI rate will end the year at 4%, while core CPI, which excludes volatile food and energy prices, will be at 2.7%.

As for September, BofA Securities economists expect headline inflation to be higher than in August thanks to higher gas prices, while core inflation could moderate as tariff-related pressures ease. However, the group warns that core CPI could accelerate if airfares keep rising. If this happens, the Fed could be encouraged to raise interest rates in October for a second straight meeting.

Earnings season gets rolling this week

Larkin believes the new earnings season, which gets rolling this week, "may play a bigger role in shaping the market's momentum into year-end, since it may signal how strong those tailwinds really are."

Third-quarter earnings season is expected to be strong. FactSet Senior Earnings Analyst John Butters says current projections are for a 30% year-over-year S&P 500 earnings growth rate. If this is the actual earnings rate, it will mark the third straight quarter of year-over-year earnings growth, he adds.

This week's earnings calendar features a handful of blue chip and financial stocks. Johnson & Johnson (JNJ, +0.9%) and JPMorgan Chase (JPM, +0.4%) kick things off bright and early Tuesday morning.

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Stocks continued to climb a wall of worry Friday, with market participants undeterred by rising Treasury yields and higher oil prices. A dreary reading on consumer sentiment didn't change today's positive trajectory, either, with Wall Street hopeful for another strong corporate earnings season.

At the close, the blue-chip Dow Jones Industrial Average was up 0.8% at 51,654, the broader S&P 500 was 0.6% higher at 7,811, and the tech-heavy Nasdaq Composite added 0.6% to 27,366. All three equity benchmarks closed higher on the week, too.

Friday's positive finish came even as yields on the 2-year (+3.3 basis points to 4.793%) and 10-year (+1.1 basis points to 5.244%) Treasuries resumed their march higher.

Oil prices gained, too, with front-month West Texas Intermediate crude futures climbing 0.4% to settle at $91.85 per barrel. Rising energy costs are expected to keep price pressures elevated. We'll get the latest inflation updates next week, starting with Wednesday morning's release of the September Consumer Price Index (CPI).

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The wall of worry is "getting taller," says Bob Edwards, chief investment officer at Edwards Asset Management, but "investors may be focusing too heavily on rising bond yields and geopolitical uncertainty while overlooking the extraordinary strength of corporate earnings."

Earnings season gets rolling next week with several blue chip and financial stocks set to report. "Third-quarter S&P 500 earnings growth year-over-year is expected to approach 30%," notes Edwards, "and the start of earnings season in the coming days will act as a much-needed reminder for just how good the earnings picture is."

Consumer sentiment keeps sliding

Consumer sentiment continued to decline in October. The University of Michigan's preliminary Consumer Sentiment Index fell 3.7% month over month to 46.3 — its second-lowest reading on record.

"Frustration over cost-of-living continues to mount, as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year," says Surveys of Consumers Director Joanne Hsu.

This could also affect the midterm elections, says Jim Baird, chief investment officer with Plante Moran Financial Advisors. "Consumers across the political spectrum are frustrated with rising prices and a sense of treading water financially," Baird explains. "It may not be readily apparent in headline GDP data, but it's likely to be very apparent as voters cast their ballots in the coming weeks."

SpaceX's wireless plans sink telecom stocks

In single-stock news, AT&T (T, -9.8%), T-Mobile US (TMUS, -13.3%) and Verizon Communications (VZ, -8.8%) were three of the biggest decliners Friday after SpaceX (SPCX, +1.3%) on Thursday said it is buying a nationwide low-band spectrum license portfolio.

The purchase puts Elon Musk's space exploration and artificial intelligence (AI) company one step closer to its Starlink Mobile segment becoming "a major mobile carrier in the U.S."

UBS Global Research analyst John Hodulik says "this is the most tangible step SpaceX has taken to date to build out the stack required to offer a proper Mobile network." However, he believes today's telecom sell-off is "a knee-jerk reaction" given the potential for what is likely to be a lengthy buildout.

While telecom stocks suffered on the SpaceX news, wireless tower providers including American Tower (AMT, +9.3%) and Crown Castle (CCI, +15.6%), soared.

Delta posts a rare earnings miss on higher fuel costs

Delta Air Lines (DAL) closed marginally higher Friday, after the air carrier reported earnings of $1.72 per share, up 0.6% year over year and below analysts' estimate of $1.76. This marked Delta's first bottom-line miss since Q3 2024 and was due to fuel costs coming in $500 million more than expected.

The company also cut its full-year forecast to reflect higher fuel costs.

Still, demand remains high, with Delta reporting year-over-year revenue growth of 21% to $20.2 billion, more than analysts expected.

And Wall Street remains overwhelmingly bullish toward the blue chip stock. Of the 25 analysts covering DAL who are tracked by S&P Global Market Intelligence, 24 say it's a Buy or Strong Buy vs one that has it at Sell. Plus, the average price target of $101.48 represents implied upside of 24% to current levels.

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The S&P 500 and Nasdaq Composite closed lower for a second straight day Thursday as market participants worried about lofty Treasury yields and spiking oil prices. A sell-off across the technology sector didn't help, with several mega-cap names falling on OpenAI's worrisome revenue update.

At the close, the broader S&P 500 was off 0.5% at 7,765, and the tech-heavy Nasdaq was 1.3% lower at 27,193. Despite back-to-back losses, the two benchmarks remain near the record highs they hit earlier this week.

The blue-chip Dow Jones Industrial Average eked out a 0.1% gain to 51,231 on strength in Chevron (CVX, +3.2%) and Home Depot (HD, +3.4%).

Treasury yields eased back Thursday, but remain near their highest levels in years. The yield on the 2-year Treasury fell 1.1 basis points to 4.753% and the yield on the 10-year Treasury declined 5 basis points to 5.227%. The 30-year Treasury yield hit a fresh 24-year peak in intraday trading, but closed down 5.9 basis points at 5.602%.

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Front-month West Texas Intermediate crude futures, meanwhile, climbed to 3.6% to $91.49 per barrel after several media reports suggested the Trump administration was considering large-scale military operations against Iran. An early afternoon Truth Social post from President Donald Trump said the U.S. will not attack Iran ahead of the midterm elections, which brought futures off their intraday highs.

Oil prices are down more than 13% from their mid-September peak near $105, but are up roughly 1% so far in October.

OpenAI's $20 billion revenue shortfall weighs on tech stocks

Tech stocks slumped Thursday after a report in the Financial Times indicated that OpenAI's annualized revenue was $50 billion — $20 billion below what was previously reported.

According to the article, the metric "is the most important indicator of overall demand for AI," and helps support massive infrastructure spending. While the $50 billion figure reported by FT still represents impressive growth from 2025, the discrepancy was enough to spook investors who are worried about an AI spending slowdown.

The news also caused several mega-cap AI stocks to sell off, with Nvidia (NVDA, -2.9%), Advanced Micro Devices (AMD, -3.9%) and Micron Technology (MU, -4.8%) all closing lower.

Chipotle soars on Starbucks takeover chatter

Chipotle Mexican Grill (CMG) was one of the best S&P 500 stocks Thursday, gaining 6.2%, after a separate Financial Times report said Starbucks (SBUX, -0.4%) is considering buying the $42 billion burrito chain.

While D.A. Davidson analyst Matt Curtis says the odds of a megadeal between the two parties are "relatively low," it would combine two of the country's largest restaurant chains.

Starbucks is the second-largest public restaurant chain by sales in the U.S., while Chipotle is the seventh-largest. It would also reunite Starbucks CEO Brian Niccol with his former employer. Niccol served as chief executive at Chipotle from 2018 through 2024.

PepsiCo gains after earnings

Over on the earnings calendar, PepsiCo (PEP) climbed 3.7% after the soda pop and snack maker reported its fiscal third-quarter results.

For the three months ending September 5, Pepsi said earnings rose 2% year over year to $2.34 per share, while revenue was up 5.6% to $25.3 billion.

However, the company lowered its full-year earnings-per-share forecast, now expecting bottom-line growth of 2.5% to 3.5% vs the 5% to 7% it previously guided for.

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Stocks opened lower Wednesday as the long-term Treasury yields hit their highest levels in 24 years. A successful auction of 10-year notes helped yields ease back from their intraday highs, but it wasn't enough to send the main equity benchmarks into positive territory.

The 10-year Treasury yield fell slightly after this afternoon's bond action, but still closed up 1.5 basis points at 5.286%. The yield on the 30-year Treasury also pulled back from its early morning peak, but gained 3.0 basis points to 5.671%.

As for stocks, the blue-chip Dow Jones Industrial Average fell 0.7% to 51,179, the broader S&P 500 shed 0.2% to 7,801, and the tech-heavy Nasdaq Composite gave back 0.2% to 27,538.

Rising Treasury yields were in focus at the Federal Reserve's September meeting. "Changes in inflation compensation accounted for most of the net increase in shorter-maturity Treasury yields, while changes in real rates contributed to most of the net increase in longer-maturity Treasury yields," stated the minutes from the most recent Fed meeting, where the central bank raised interest rates for the first time since 2023.

Still, most committee members believe that financial conditions remain "supportive of economic growth."

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The minutes also revealed that "most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end."

The odds for an October rate hike have dropped over the past month thanks to encouraging inflation data and a weak September jobs report. According to CME Group FedWatch, futures traders are pricing in an 83% chance the Fed will keep the fed funds rate unchanged when it meets later this month — up from 54% a month ago. However, the probability of a December rate hike has jumped to 69% from 36%.

Webull sinks 19% on China risk

In single-stock news, Webull (BULL) sank 19.1% after a congressional committee flagged the online trading platform as a national security risk.

A report compiled by the House Select Committee on China said Webull is "tied in structural ways to the People's Republic of China," and that there is "a profound gap" in how the company markets itself as "an American company" and how it is controlled.

A Webull spokesperson said the report contains "significant inaccuracies and unsupported conclusions," and that it is prepared to "address any questions directly and with the same transparency we bring to the SEC, FINRA, and regulators worldwide."

Siebert Financial analyst Brian Vieten paused his Buy rating and price target on the fintech. "The potential regulatory and operational implications of these findings create a level of uncertainty that we cannot reasonably incorporate into our estimates or valuation at this time," Vieten says, adding that he's reviewing the committee's findings and waiting for more information from Webull.

Caterpillar, Deere drop on FTC inquiry

Caterpillar (CAT) and Deere (DE) also closed lower Wednesday after the Federal Trade Commission (FTC) and Department of Agriculture launched a public inquiry into issues impacting agricultural equipment manufacturing and distribution practices.

"The joint request for information is a part of the FTC's ongoing work to preserve competition in the agricultural sector," according to a press release. The regulator is attempting to address complaints and anticompetitive concerns about barriers farmers face when buying and maintaining farm equipment.

CAT slumped 5.8%, making it the worst Dow Jones stock Wednesday. DE shares fell 3.8%.

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The S&P 500 reached its first new all-time high since August, and the Nasdaq Composite hit a fresh peak for the second straight trading session, as selling pressure in the global bond market eased amid up-and-down intraday price action. With another earnings season on the horizon, investors, traders and speculators remain focused on the potential benefits of artificial intelligence (AI).

At the closing bell, the broad-based S&P 500 was up 0.6% to 7,819, a new all-time closing high, as the index extended its winning streak to four. The tech-heavy Nasdaq Composite also posted a new high, rising 0.5% to 27,599. The blue-chip Dow Jones Industrial Average, meanwhile, added 0.5% to 51,521. Papa Dow is still about 6% below its own new high.

"The fourth quarter is seasonally the strongest quarter, and November is the second strongest month," Louis Navellier of Navellier & Associates observes. Navellier also notes "that since 2027 is the third year of a Presidential election, which is the best-performing year for the S&P 500 during the Presidential election cycle, investor optimism is rising."

Navellier expects that "all the bickering about data centers and high energy prices will diminish" after midterm elections next month.

Indeed, as Kiplinger's Anne Kates-Smith writes, "If history is a guide, you can expect a power shift in Congress. But history also shows that whether your party is victorious or not, your portfolio is likely to survive the midterms unscathed—and maybe a little ahead."

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With traffic through the Strait of Hormuz improving in the face of rising attacks by Iran, the front-month West Texas Intermediate crude oil futures contract was higher by 0.4% to $89.80 per barrel. WTI closed above $100 as recently as September 18.

The 2-year Treasury yield was down 3.3 basis points to 4.798%, while the 10-year Treasury yield (-2.7 bps, 5.284%) and the 30-year Treasury yield (-0.5 bps, 5.659%) also pulled back from recent highs.

The $6 trillion stock

Maybe you're old enough to remember "The Six Million Dollar Man," maybe you're not. But the fact that Nvidia (NVDA, +0.1%) is on the verge of a $6 trillion market cap is at least as monumental as that TV show used to seem.

Even if only a naive segment of the audience was awed by what we imagined about bionics back then, if you're reading this, you're probably paying some attention to AI and robotics right now.

Indeed, that's what Nvidia refers to as "physical AI." The company says its research here "is driving the future of intelligent automation, enabling robots to handle complex tasks and safely collaborate with humans."

Meanwhile, renewed AI boom optimism lifted the Magnificent 7 stocks to a combined value of more than $25 trillion for the first time on Tuesday, according to Dow Jones Market Data.

In fact, Amazon (AMZN, +2.0%) and Microsoft (MSFT, +0.8%) outperformed Nvidia today, as markets continue to reprice their AI infrastructure initiatives.

Alphabet (GOOGL, +0.4%) and Apple (AAPL, +0.2%) were higher, too, though Meta Platforms (META, -0.4%) posted a modest loss.

Tesla's (TSLA, +0.5%) gain helped Elon Musk remain the world's first trillion-dollar man in net worth terms.

CEG gets another nuclear-level Mag 7 boost

Constellation Energy (CEG, +12.3%) was among the top-performing S&P 500 stocks after management of the electric company announced a new long-term deal with Google that includes a 20-year power purchase agreement.

The commitment from Alphabet's search subsidiary will support upgrades sufficient to add 890 megawatts of capacity at 11 Constellation-owned nuclear plants in Illinois, Pennsylvania and New Jersey.

Constellation is also using Google Cloud and Gemini Enterprise to establish an "AI for energy" blueprint focused on accelerating delivery, optimizing efficiency and protecting infrastructure.

Alphabet will buy another 2,700 MW from Constellation's broader power fleet over a 15-year period, and the companies aren't done making clean energy deals.

The utility stock was down 23.9% year to date through Monday, as markets waited for more news about power-hungry hyperscalers and their appetite for its nuclear capabilities.

In 2024, Constellation agreed to restart the Three Mile Island nuclear plant in Pennsylvania with support from a 20-year PPA with Microsoft. Last year, it reached a 20-year PPA with Meta.

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The Nasdaq Composite notched a new all-time high during a broad-based rally on Monday, as markets focused on upside for the artificial intelligence (AI) revolution. Amid another uptick for yields across the Treasury spectrum, investors, traders and speculators are placing more weight on the potential for AI to increase efficiencies over the long term, even as it drives up costs in the short term.

The 2-year Treasury yield ticked down 0.4 basis points to 4.821%, while the 10-year Treasury yield (3.2 bps, 5.309%) and the 30-year Treasury yield (3.4 bps, 5.664%) reached new 52-week highs again, as a global bond market sell-off continues.

Still, at the closing bell, the tech-heavy Nasdaq Composite was up 1.1% to 27,477, a new all-time closing high. The broad-based S&P 500 had added 0.7% at 7,773, and the blue-chip Dow Jones Industrial Average was up 0.2% to 51,267.

"There is no doubt that the U.S. remains an oasis and is the engine behind global GDP growth," Louis Navellier of Navellier & Associates writes. As Navellier explains, "FactSet is estimating that the S&P 500’s third-quarter earnings are forecast to rise 29.5%."

We are indeed in historic territory, as analysts at the Well Fargo Investment Institute note. "Consensus for 2027 capex for the eight-largest cloud computing companies is now approximately $1.3 trillion," they write. "This would represent approximately 3.7% of our nominal gross domestic product forecast for next year, putting this investment cycle on par with some of the largest in U.S. history."

Comparable cycles include the railroads from 1879 to 1890, which accounted for more than 4% of GDP, electric power in 1929, oil and gas in 1980 and the dot-com boom in 2000.

Services surveys say the economy is still expanding

The Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI) printed at 54.9% in September, down from a reading of 55.4% in August and below a consensus forecast of 55.1%.

But, as William Blair economist Richard de Chazal says, it's the 27th consecutive month the index has been above the 50% expansion-contraction line. And, in the aftermath of a cooler-than-expected September jobs report, the survey confirms that "services sector employment, which accounts for the bulk of economic activity, remains on firm footing."

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As Chazal notes, the employment index returned to expansion for the first time in three months. Still, although crude oil traffic through the Strait of Hormuz is recovering, fuel shipments are still well below prewar levels, and diesel, gasoline and petroleum products helped push the prices index to its highest level since July 2022.

"The bigger pressure remains on costs," Chazal writes. "For the Fed, the report suggests inflation remains the main concern. Friday's jobs data lowered the odds of a hike at the October meeting, but with demand holding firm and input costs still climbing, another hike remains likely."

INTC hit by Elon's TerraFab strategy

Nvidia (NVDA, +2.1%) hit another new all-time high and was among the top two Dow Jones stock on Monday, helped by optimism about the AI trade, as well as the impact of announcing the biggest stock buyback in market history last week.

But fellow semiconductor stock Intel (INTC, -2.6%) was down after Elon Musk confirmed that Taiwan Semiconductor Manufacturing (TSM, +2.8%) is talking with his TeraFab chipmaking project about its facilities in Texas.

"Just discussions, but something may come of it," the CEO of SpaceX (SPCX, +7.6%) and Tesla (TSLA, +2.2% responded on X to reports of the TeraFab-TSMC talks.

Intel has an existing deal with TeraFab. Musk clarified in a follow-up post that TSMC could work with rather than replace Intel at his chipmaking plant.

Intel also has a partnership with Alphabet (GOOGL, +0.9%) to support Google's AI cloud infrastructure, and the chipmaker also received $5 billion from Nvidia as part of a project to co-develop custom chips.

CBRS looks a little better today

Cerebras Systems (CBRS, +9.1%) has had a tough go of it since the tech stock completed its initial public offering (IPO) in May, generating a loss of more than 4% vs a gain of more than 10% for the S&P 500.

But the AI infrastructure firm also got a boost from a post on X. "Cerebras is a close partner," Open AI CEO Sam Altman said late Friday, "and we have a deep engagement pushing on the frontiers of speed."

OpenAI is Cerebras' biggest customer by revenue backlog. In January, the companies signed a $10 billion deal to provide ChatGPT with 750 megawatts of computing power through 2028.

At the same time, research firm SemiAnalysis reported that OpenAI is using Nvidia's hardware rather than Cerebras's to support "Ultrafast" mode for its latest model.

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Every market cycle produces a handful of IPOs that seem impossible to ignore. The company dominates headlines, investors rush to gain access, and financial media debate whether the stock could become the next great growth story.

But before joining the excitement, investors should ask a more important question: Is the opportunity still attractive at today's price?

Why IPOs are different now

A generation ago, an IPO often marked the beginning of a company's growth story as a public company, following a relatively brief period as a private startup. Today, it more often marks the end of a long private‑market journey.

Many of the most successful businesses stay private for years, raising multiple rounds of capital that can amount to billions of dollars in funding and building scale before they ever list their shares.

That matters because a substantial share of value creation can happen before the IPO. By the time shares begin trading publicly, the company may already be mature and profitable.

Investors buying at the offering price are often not purchasing a ground‑floor opportunity; they are buying after much of the early growth has already been priced in. That's why investors should be careful about assuming that "initial" equals "early."

The valuation problem

When a company is widely discussed and covered positively by the media, demand can quickly overtake discipline. That can push the initial valuation quite high.

Think of it this way: Strong fundamentals do not automatically create strong investment outcomes.

For example, consider two investors who are looking at the same company. One buys during a hot IPO when enthusiasm is high, while the other waits, watches the stock trade for a period of time and buys only after the price resets to something closer to reality.

Even if they own the same company, their outcomes may be very different. Entry valuation can often determine the investor outcome as much as business fundamentals.

Are IPOs a liquidity event?

When a company goes public, the founders, early employees and private investors may already have captured years of growth. The IPO helps those stakeholders realize value, but for public-market investors, that can change the timeline. They often enter after years of private ownership, at a stage when the business is a well-known entity and the valuation can incorporate many years of extensive forward growth assumptions.

That shift means the investor's advantage is often smaller than many assume. If the company is strong, its future may still be bright. But the IPO valuation may already reflect a lot of that optimism.

You may already own it

Another reason to reconsider investing in an IPO is that many large IPOs eventually become part of broad market indexes or are quickly held by actively managed funds.

To put it another way, if you own diversified stock funds, you may gain exposure to a newly public company without ever placing an IPO order.

A series of mega-listings has also prompted several major indexes to adjust their methodology to allow for incorporation sooner than in the past.

Before buying an IPO directly, you should ask whether your existing portfolio already provides exposure through a total market fund, large-cap growth fund, sector fund or another diversified strategy. If the answer is yes, the case for adding a concentrated position weakens.

If the new company is in an industry you already are heavily invested in, you may be doubling down on the same risk without realizing it. Diversification does not eliminate risk, but it can keep a single headline-grabbing stock from dominating your outcome.

A simple IPO checklist

Before reaching out to your adviser to participate in an IPO, consider five questions:

1. Has the company already gone through most of its high-growth phase in private markets?

2. Does the offering price leave room for upside, or does it assume perfection?

3. Would I still want to own this stock if the media attention disappeared?

4. Do I already own similar exposure through diversified funds?

5. If I buy, can I size the position modestly enough that a bad outcome will not derail my plan?

If you're doubting the answers to these questions, it may be worthwhile to show patience.

A better time to decide on an IPO is often before the hype begins, when the price, the business and the role it may play in your portfolio can be evaluated objectively.

A strategy for disciplined investors

For many individuals, a smart way to approach IPOs is to wait, watch and focus on process. Let the stock trade, let the business prove itself as a public company and let the valuation settle.

Sometimes that means missing the first wave of excitement. However, that is often a small price to pay for avoiding a poorly timed purchase.

In some cases, investors may have an opportunity to buy the same company later at a similar or even better valuation, with more information and less emotion, although future valuations are uncertain.

If you do want exposure to innovation, a diversified portfolio may be a better option. Professionally managed strategies can provide exposure to companies as they enter the public markets, often without the need to chase a day-one price.

Where the value is being created

Another important shift for investors to consider revolves around a growing share of value creation that occurs in private markets rather than public markets.

Decades ago, many companies went public relatively early in their development, allowing public-market investors to participate in years of rapid growth. Today, abundant private capital from venture capital firms, private equity sponsors, sovereign wealth funds and other institutional investors enables companies to remain private much longer.

As a result, some of the most dramatic growth in revenue, users and enterprise value may occur before a company ever reaches the public markets.

For qualified investors seeking exposure to earlier-stage innovation and growth, participating through professionally managed private-market strategies may represent a more direct way to access this part of the corporate life cycle, though private investments come with their own risks, higher investment minimums, reduced liquidity and longer holding periods.

The bottom line

IPOs can be compelling, especially when they may involve well-known companies poised to disrupt markets in a positive way. But investors should remember that an exciting story is not the same thing as a successful investment.

A disciplined IPO strategy is about recognizing where value is created, who captured it first and whether the public offering still offers a reasonable purchase price.

For most investors, the recommendation is for patience and diversification. Introducing private markets exposure may also be a way to gain access to a portion of where the value creation has shifted.

The next time a company with a great deal of hype goes public, work with your adviser to review the price, your existing exposure and the role the stock would play in your portfolio. If the answer is not clear, waiting is often the most disciplined move of all.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Stocks surged on Friday after a cooler-than-expected September jobs report eased pressure on the Federal Open Market Committee (FOMC) to raise interest rates at its meeting later this month. Oil prices retreated amid a global effort to support crude supply. But bond yields pushed up again following an initial pullback on the employment news, and the main equity indexes slipped from intraday highs.

The 2-year Treasury yield fell from 4.787% on Thursday to 4.693% right after the release of the nonfarm payrolls report, but it was already rising before the opening bell and ended the session up 5.0 basis points at 4.837%.

The Bureau of Labor Statistics (BLS) said the U.S. added 29,000 new jobs last month, well below a consensus forecast of 93,000, and the unemployment rate unexpectedly ticked up to 4.2% from 4.1%.

The 10-year Treasury yield (+4.5 bps, 5.279%) and the 30-year Treasury yield (+2.5 bps, 5.628%) followed similar trajectories.

"Payrolls growth disappointed in September," Fifth Third Commercial Bank Chief Economist Bill Adams writes. "With downward revisions to July and August, the acceleration of job growth that seemed visible in the August jobs report has been revised away."

Still, the economist observes, the mediocre September jobs report isn’t bad enough to shift the Fed's focus from inflation.

"Their next decision in late October is live," according to Adams, "and will probably be swayed by the September CPI and PPI reports, geopolitical developments, and prices at the pump between now and then."

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According to CME FedWatch, price action in the federal funds futures market indicates a 22.7% probability the Fed hikes rate by 25 basis points at the October Fed meeting, down from 64.2% a week ago.

Meanwhile, the front-month West Texas Intermediate crude oil futures contract was down 1.5% at $91.45 per barrel.

In an effort to mitigate disruptions to the global supply chain, the G7 and the International Energy Agency will coordinate the release of up to 100 million barrels of emergency crude oil and diesel fuel over the next four months.

HPE gets an AI bounce

By the closing bell, the tech-heavy Nasdaq Composite was holding a 1.2% gain at 27,190, the broad-based S&P 500 had risen 0.7% to 7,722, and the blue-chip Dow Jones Industrial Average was higher by 0.5% at 51,176.

Artificial intelligence (AI) revolutionary Nvidia (NVDA) hit a new all-time high, and its market cap climbed closer to $6 trillion, following the $150 billion stock buyback increase management announced on Monday.

It's the biggest stock buyback ever, and Nvidia plans to buy a total of $235 billion of its own shares through fiscal 2028.

Electric vehicle maker Tesla (TSLA) was up 4.5% on management's report that third-quarter deliveries topped Wall Street's forecast, though rival Rivian (RIVN) was down 3.1% because it didn't beat its delivery forecast by enough to satisfy analysts.

Old-school Silicon Valley legacy outfit Hewlett-Packard Enterprise (HPE, +7.4%) was one of the best-performing S&P 500 stocks and also closed at an all-time high on Friday.

Management of the tech stock forecast solid revenue growth for its networking segment because of demand for AI infrastructure. The segment includes "data-center networking, routing, and campus & branch" and serves enterprise and service provider customers such as hyperscalers, as well as "neocloud" platforms that support AI computers.

Has Nike lost its swoosh?

Nike (NKE) was the worst-performing Dow Jones stock on Friday following management's report on fiscal 2027 first-quarter results after the closing bell on Thursday.

Revenue was slightly below Wall Street's forecast, and earnings were in line with the consensus estimate. But management's forecast for full-year earnings of $1.15 to $1.35 per share fell well shy of the $1.67 analysts wanted to see.

And guidance for a high-single-digit decline in percentage terms for revenue was a lot bigger than Wall Street expected. As UBS analyst Jay Sole writes in a post-report note, "The pivotal Nike question remains 'Is all the 'bad news’ now priced in?'"

Sole cites NKE's steep pullback, but the analyst says he still doesn't see a good entry point. One potential upside catalyst is Nike's analyst day in November and whether management can convince Wall Street its downward earnings revision cycle has ended.

"The main downside risk," he adds, "is the rebound takes much longer than the market anticipates and therefore the downward earnings revision cycle may not be over."

Sole reiterated his Neutral (Hold) rating, but he cut his 12-month target price for the iconic consumer discretionary stock to $34 from $42.

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Stocks opened higher Thursday thanks to a solid round of corporate earnings. But just as the market giveth, the market taketh away, and by mid-morning, all three main benchmarks were in the red as Treasury yields once again hit their highest levels in decades.

The 10-year Treasury yield hit an intraday high of 5.344% today — its loftiest level since 2002 — before closing down 5.9 basis points at 5.234%. The yield on the 30-year Treasury also notched its highest intraday peak in 24 years, 5.693%, but finished 3.6 basis points lower at 5.603%.

The main equity benchmarks fluctuated alongside Treasury yields. The blue-chip Dow Jones Industrial Average, for instance, opened 0.4% higher but was down 0.7% by mid-morning. At the close, the 30-stock index was up 0.04% at 50,926.

The broader S&P 500 (+0.2% at 7,666) and tech-heavy Nasdaq Composite (+0.04% at 26,871) experienced similar price action, though both closed in positive territory.

There are several reasons bond yields are spiking right now, explains Kiplinger contributor Kyle Woodley in his feature on what's happening in the bond market right now. A supply and demand imbalance, for one, as well as expectations for more Federal Reserve rate hikes and "worries about high energy prices keeping inflation elevated."

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This morning's data from the Institute for Supply Management (ISM) showed that while economic activity in the manufacturing sector expanded for the ninth straight month, the prices index jumped 6.8 percentage points from August to September.

While the ISM report showed that manufacturing continued to expand, "inflation remained the dominant story here," says Priscilla Thiagamoorthy, senior economist at BMO Capital Markets, and "the sharp rebound in input price pressures and persistent supply constraints will likely keep the Fed on edge."

According to CME Group FedWatch, odds for an October rate hike have dropped to 26% from 69% one week ago, but futures traders are currently pricing in a 62% probability of a quarter-percentage-point increase to the federal funds rate in December.

Micron delivers another impressive earnings beat

Corporate earnings were also in focus Thursday, with Micron Technology (MU, +3.0%) arguably the most anticipated company reporting.

The semiconductor stock has had a sizzling run on the price charts, quadrupling for the year to date, on snowballing demand for its high-bandwidth memory (HBM) chips, which are critical for artificial intelligence (AI).

In its fiscal fourth quarter, Micron said earnings per share jumped to $33.42 from $3.03 the year prior, while revenue grew nearly fivefold to $54.2 billion. It also expects strong top- and bottom-line growth in fiscal 2027.

Micron's earnings report reinforces "our constructive view on memory's role in AI and increasing supply-side discipline supporting a durable cycle," says BofA Securities analyst Vivek Arya. "As HBM pricing agreements renew and strategic customer agreements (SCAs) expand, management now sees visibility into quarter-over-quarter sales/gross margin expansion every quarter in FY27 from FQ1."

Arya calls MU a "top AI pick" and reiterated a Buy rating and $1,550 price target, representing implied upside of 41% to current levels.

Accenture soars 16% for its best day ever

Elsewhere on the earnings calendar, Accenture (ACN) jumped 15.8% — its best day ever — after the global consulting company reported better-than-expected fiscal fourth-quarter results.

ACN also said new bookings — a measure of future revenue — rose 4% year over year, and it reached a record high of 141 quarterly clients with bookings of $100 million or more. Additionally, its board of directors approved a 5% hike to its quarterly dividend.

"Given the downbeat stock performance, there was a lot to be enthusiastic about in the FQ4 results and next year's guidance," says Susquehanna analyst James Friedman.

The analyst raised his price target on the tech stock to $210 from $153, noting the company has "the right assets and strategy." However, he maintained a Neutral (Hold) rating, saying he needs to see "a clearer path with the AI ecosystem."

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Stocks were choppy Wednesday as market participants considered what the latest inflation data means for rate hikes. Wall Street also looked ahead to this Friday's key jobs report, which is expected to show a steady labor market — another important factor in the Federal Reserve's upcoming policy moves.

Ahead of the open, the Bureau of Economic Analysis (BEA) said the Personal Consumption Expenditures (PCE) Price Index — the Fed's preferred measure of inflation — rose 0.2% from July to August and was up 3.4% over the year prior.

Core PCE, which excludes volatile food and energy prices, was up 0.2% month over month and 3.0% year over year.

The inflation data came in better than economists expected, though the monthly increases accelerated from July and the lower year-over-year figures were a result of the BEA's adjustment to how it calculates several components.

"Even after major methodological revisions, PCE inflation is still running hot however you cut it," says Sonu Varghese, global macro strategist at Carson Group.

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Varghese also points to the BEA's final revision to second-quarter gross domestic product (GDP), which showed the economy grew at a 2.2% pace vs the previous estimate of 1.5%.

"The economy is running hot, policy remains easy, and the Fed's challenge is figuring out how much restraint is needed," Varghese says. "That's a tailwind for stocks as we move into Q4."

Stocks showed resilience in September, and Q4 could be strong

Seasonality is another potential tailwind for stocks heading into the final quarter of 2026.

On Wednesday, the blue-chip Dow Jones Industrial Average closed down 0.9% at 50,906, bringing its September decline to 4.0%. The tech-heavy Nasdaq Composite gained 0.2% today to finish at 28,861, and added 2% on the month.

And the S&P 500 slipped 0.3% to 7,651, ending the month down 0.2%. Since 1928, the S&P 500 has averaged a September loss of 1.1%, according to Yardeni Research.

September has historically been a negative month for stocks, so the fact that the equities market weathered the storm "against the backdrop of a Fed hike and soaring long-end interest rates is emblematic of the insatiable demand for shares of U.S. companies," says José Torres, senior economist at Interactive Brokers.

"The headwind now switches to a tailwind, with the month before and the five following the midterm election being the best six-month stretch on the four-year election calendar, averaging a 14% gain during midterm years, double the 7% during all years," explains Mark Hackett, chief market strategist for Nationwide.

September jobs report is on deck

Wall Street will now turn its attention to this Friday's release of the September jobs report, which is expected to show the U.S. added 84,000 jobs, down from the 162,000 increase in the August jobs report but still a healthy number.

Ahead of this highly anticipated economic report, ADP data showed private payrolls rose by 90,000 in September, well above economists' forecast of 68,000.

"The combination of reports has strengthened investor confidence that the U.S .central bank may become less hawkish, and it has lifted optimism about the cycle's ability to manage much loftier interest rates by remaining resilient and avoiding a slowdown," explains Torres.

According to CME Group FedWatch, futures traders are now pricing in a 65% probability the Fed will keep interest rates unchanged in October — up from 49% one day ago. Odds are still favoring a quarter-percentage-point hike in December.

Moderna stock sinks on new Sell rating

In single-stock news, Moderna (MRNA) shares slumped 5.4% after Citi slapped the red-hot drugmaker with a new Sell rating. Shares are up nearly sevenfold since mid-August on optimism around the company's new mRNA skin cancer treatment, intismeran, that's being jointly developed with Merck (MRK, -2.6%).

But Citi analyst Geoff Meacham thinks MRNA has run too far, too fast, and downgraded the healthcare stock following its "outsized run."

While Meacham admits that intismeran "could become a market-leading therapy in melanoma," he believes "the re-rating now reflects successful expansion in many tumor types and unrealistic implied sales."

Most analysts are on the sidelines when it comes to Moderna stock. Of the 23 who are following MRNA tracked by S&P Global Market Intelligence, five say it's a Buy or Strong Buy, 15 have it at Hold and three call it a Sell or Strong Sell. This works out to a consensus Hold rating.

BofA says these are its top five chip stock picks for Q4

Semiconductor stocks as a group were up slightly on the final day of September, but the iShares Semiconductor ETF (SOXX) ended the month up 11.2%.

And BofA Securities analyst Vivek Arya expects additional gains through the end of the year and into the start of 2027. "Historically, CQ4 (and CQ1) have been the two best seasonal quarters to own chip stocks, with 300-500 basis points of median outperformance vs SPX from 2010-25," he explains.

His top five chip stock picks for the fourth quarter are:

• Nvidia (NVDA, +0.5), with stock buybacks and multiple GPU Technology Conferences serving as near-term catalysts.
• Intel (INTC, +3.7%), which Arya believes will benefit from agentic CPU strength and foundry wins.
• Marvell Technology (MRVL, +0.4%), which could get a boost from its October 6 Analyst Day.
• Micron Technology (MU, +0.0%), with buybacks beginning on December 9.
• Lam Research (LRCX, +1.4%), which could get a boost from demand for memory and logic chips.

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The main equity indexes were down again on Tuesday, as oil prices pulled back but bond yields continued to reflect concerns about energy costs and inflationary pressures, as well as economic growth and government debt. At the same time, investors, traders and speculators can look forward to a seasonally strong period for the stock market.

At the closing bell, the tech-heavy Nasdaq Composite had slipped 0.09% to 26,797, the S&P 500 was down 0.8% at 7,683, and the blue-chip Dow Jones Industrial Average had fallen 0.7% to 51,481.

The front-month West Texas Intermediate crude oil futures contract was down 3.7% to $89.21 per barrel. Front-month Brent crude oil futures, the global benchmark, dipped 1.9% to $95.95.

But the 30-year Treasury yield was up for a sixth straight trading session, rising 2.5 basis points to 5.587% and crossing above 5.61% for the first time since 2002. Both the 2-year Treasury yield (-3.5 bps, 4.889%) and the 10-year Treasury yield (+0.9 bps, 5.251%) also reached new 52-week highs before pulling back on Tuesday.

Meanwhile, the Conference Board Consumer Confidence Index declined for a third straight month to its lowest level since April 2014. A print of 81.9 for September was well below a consensus forecast for an increase to 89.0 from a revised 88.6 in August.

"Concerns about sustained inflation, high gas prices, and job scarcity likely contributed to the overall decline," Barclays economist Pooja Sriram concludes.

It's not all doom-and-gloom, though. "The fourth quarter is seasonally strong," Louis Navellier of Navellier & Associates observes, "and the third year of a presidential election cycle is also the strongest year in the four-year presidential term."

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At the same time, Navellier acknowledges, "Investors might be asking, aren't higher interest rates and Fed key rate hikes going to derail the stock market?" It depends, of course: "The answer is no for growth stocks, which have beaten value stocks for 12 consecutive years."

From a broader level, Navellier explains that relatively strong GDP growth in the U.S. sets it apart from other markets where interest rates are also rising, such as Japan, the UK and France.

"Their underlying government debt might only be fixed with more money printing," Navellier says, amid a "staggering" $365 trillion in global government debt.

FICO falls another 27%

With the durability of its software business in question for many months, Fair Isaac (FICO) had already lost more than half of its market cap from the end of 2025 through the closing bell on Monday.

FICO extended its decline by another 26.6% and was the worst performing S&P 500 stock on Tuesday after U.S. Federal Housing Director Bill Pulte formalized a plan to bring competition to the government-sponsored mortgage market.

"We are Simplifying Mortgage Pricing following feedback from lenders and consumers," Pulte wrote on X. "Instead of two separate pricing grids, which makes zero sense, Fannie and Freddie are hereby moving to ONE PRICING GRID with VantageScore joining the existing FICO Classic pricing grid."

Pulte posted earlier in September that since 2020 "FICO has increased the price per a person's credit score by 1,800%. FICO has enjoyed a monopoly. No more."

Indeed, price action for what S&P Global considers a tech stock reflects threats from the federal government, as well as competitive pressure on its software business from artificial intelligence (AI).

Anthropic is talking about huge numbers

The prospectus for its upcoming IPO shows Anthropic plans to spend $518 billion to build out its AI infrastructure in coming years, as Reuters reported after the closing bell on Monday.

Anthropic recorded a net loss of $42 billion and an operating loss of $8 billion in 2025, as revenue expanded by 12 times to almost $4.6 billion. The company had approximately $20.3 billion in cash as of December 31.

Anthropic used 48 pages of its 261-page prospectus to describe its operations, and another 80 to explain risk factors, such as "existential risks to humanity" represented by AI.

Though Anthropic continues to release model updates, CEO Dario Amodei has appealed to other AI developers to exercise a little more caution as they deploy new capabilities.

Reuters reports that an IPO for the AI lab is not expected to happen until after the November midterm elections. The prospectus confirms Anthropic will seek a $2 trillion IPO valuation.

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The prospectus for its upcoming IPO shows Anthropic plans to spend $518 billion to build out its artificial intelligence (AI) infrastructure in coming years.

The prospectus confirms the initial public offering could value the AI laboratory at a market cap of more than $2 trillion, as Reuters reported after the closing bell on Monday. The document also reveals that Anthropic recorded a net loss of $42 billion and an operating loss of $8 billion in 2025, as revenue expanded by 12 times to almost $4.6 billion.

Anthropic said nearly a quarter of its revenue came from two customers, which it did not name. It also warned that many of its biggest customers aren't bound by long-term contracts.

As Reuters notes, the net loss includes a $34 billion accounting charge to reflect an increase in the estimated value of financing that could eventually ‌turn into Anthropic ⁠shares, as opposed to costs of running the business.

Infrastructure spending surged by three times to $7.3 billion against total operating expenses of $12.7 billion. The company had approximately $20.3 billion in cash as of December 31.

Anthropic used 48 pages of its 261-page prospectus to describe its operations, and another 80 to explain risk factors, such as "existential risks to humanity" represented by AI. Indeed, Anthropic's prospectus speaks of "self-preserving behaviors" and cites attempts by its models to "resist shutdown," as well as other behaviors "resembling blackmail."

CEO Dario Amodei has appealed to other AI developers to exercise a little more caution as they release new capabilities. But Anthropic continues to keep pace with competitors such as OpenAI, which is also laying the foundation for a much-anticipated IPO. Both companies have delayed their respective processes amid the rising dialogue about AI safety.

At the same time, Anthropic and OpenAI must be mindful of price action for SpaceX (SPCX), which completed its IPO in June at an offer price of $135 per share. SPCX opened at $150, then traded up to $225.64 within days. By early August, it was down as low as $104.83. It closed at $145.47 on September 28.

As BCA Research Head of Equities Noah Weisberger observes, the IPO market is both hot and cold. Issuance is at a real-dollar record, but activity is concentrated in a handful of mega-listings.

IPO performance this year has been lackluster, too, with big gains early but "subsequent performance mostly negative." Weisberger notes that two-thirds of this year's IPOs trade below their "day one" closing prices.

Still, Weisberger says, elevated issuance is weighing on returns and multiples. "Anthropic and OpenAI will bring further supply," Weisberger concludes, "and greater scrutiny of pricing, customer concentration and margins."

Reuters reports that an Anthropic IPO is not expected to happen until after the November midterm elections.

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Stocks opened lower and stayed down on Monday after renewed hope for peace in the Middle East was extinguished when President Donald Trump rejected a proposal from Iran that would have reopened the Strait of Hormuz.

Crude oil closed off its intraday highs after Saudi Arabia said it reopened a crucial pipeline. But bond yields surged again, as markets continue to focus on inflation and interest rates, on top of attacks by OpenAI models.

The front-month West Texas Intermediate crude oil futures contract was up 0.8% to $93.16 per barrel after Trump said the proposal from the Islamic Republic "would not be acceptable." According to Trump, "They want to make a deal where they open the strait immediately because they're losing so badly."

The 2-year Treasury yield, a proxy for the direction of monetary policy, surged 6.7 basis points to 4.931%, hitting a 52-week high in the process. The 10-year Treasury yield (+5.3 bps, 5.234%) and the 30-year Treasury yield (+4.9 bps, 5.551%) climbed to fresh 52-week highs again on Monday.

"Stocks are still seeking a path out of their latest consolidation," E*Trade from Morgan Stanley Managing Director Chris Larkin says of recent price action, with all three main equity indexes hovering just below all-time highs, despite geopolitical uncertainty. "Tech strength has been doing a lot of the heavy lifting for bulls lately, but the broader market hasn't been able to gain much traction because of rising yields and oil prices."

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At the closing bell, the blue-chip Dow Jones Industrial Average was down 0.7% to 51,481. Papa Dow ended a three-week losing streak on Friday, but the index remains on track for its worst September since 2022. The broad-based S&P 500 shed 0.8% to 7,683, and the tech-heavy Nasdaq Composite was down 0.9% to 26,820.

As Larkin concludes, "With the Fed focused on the inflation side of its mandate, unless this week's labor market data is a major surprise, it will likely play second fiddle to interest rates and energy."

Nvidia announces the biggest stock buyback ever

In addition to announcing a $150 billion expansion to its stock buyback plan, Nvidia (NVDA, +1.7%) introduced new software designed to protect against rogue artificial intelligence (AI) agents.

As Nvidia noted in its press release, "This marks the largest share repurchase authorization increase in history." The increase raises the total on Nvidia's existing repurchase authorization to $235 billion.

Nvidia said it expects to complete its existing stock buyback plan through its fiscal year 2028, which begins on February 1, 2027, and ends on January 31, 2028. CEO Jensen Huang said "a once-in-a-generation platform shift to AI and accelerated computing" supports the move.

"Our cash generation gives us the capacity to invest in the technologies that advance this transformation and return capital to shareholders," the leader of the AI revolution explained in a statement. "This authorization reflects our confidence in the long-term opportunity ahead."

Before the buyback announcement, Nvidia rolled out new tools to strengthen AI security. According to Nvidia, its Open Agent Safety Platform provides "full-stack governance and control" across software and hardware that run AI agents.

"AI's extraordinary potential for society will only be realized if we solve AI safety," Huang said.

"From what we know," Nvidia Vice President of Enterprise AI Justin Boitano said of a recent attack by an OpenAI model on Hugging Face, "this new security platform could have stopped the breach."

Indeed, other semiconductor stocks such as Intel (INTC, -5.7%), Marvell Technology (MRVL, -3.8%) and Qualcomm (QCOM, -7.2%) sold off on Monday in the aftermath of a report that an OpenAI agent used "brute force" techniques to access a website operated by the United Nations.

Bloom Energy (BE, -9.0%), which provides on-site power generation for AI data centers, was the worst-performing S&P 500 stock on Monday.

MongoDB CEO takes job with Meta Platforms

Until Monday morning, MongoDB (MDB, -18.5%) was getting ready to host an "investor day" teleconference on Tuesday for an in-depth look at its long-term strategy to exploit opportunities in the AI boom.

Now, the tech stock is looking for a new CEO, too, after Chirantan Desai stepped down, effective immediately, to take a senior role at Meta Platforms (META, -4.8%).

MongoDB named Dev Ittycheria as interim president and CEO, also effective immediately. Ittycheria was president and CEO of MongoDB from 2014 to 2025, as the company grew its annual revenue from about $35 million to more than $2.3 billion.

MongoDB said it "remains confident in the outlook for the business" and reaffirmed fiscal third-quarter full-year 2027 guidance management shared on September 1.

Mark Zuckerberg said in a statement that Desai will join Meta as chief enterprise platform officer and will lead the next pillar in his empire, reporting directly to the CEO.

According to Zuckerberg, Meta Enterprise Platform will "help businesses use AI to grow and transform in new ways as well."

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Investors have piled into artificial intelligence stocks over the last couple of years as the values of the so-called Magnificent 7 tech stocks and artificial intelligence companies have skyrocketed.

The tech-heavy Nasdaq 100 index gained about 49% over the last two years. Investors who placed early bets are no doubt elated. Notable stocks include AI chip maker Nvidia, which is up 81% over the period, including dividends. Google parent Alphabet returned 109%.

Even the gold standard of diversity — the S&P 500 — has been overwhelmed as the Mag 7 companies now account for one-third of its total market value.

At the same time, the AI boom has created a borrowing frenzy of tens of billions of dollars. Those loans, combined with higher borrowing costs and tech revenues that aren't climbing as fast as stock prices, could lead to a stock market crash. You should have a plan for how to handle the worst case scenario — especially as an older investor who may not have enough time to weather a prolonged downturn.

Overall, the sector is providing gains, which encourages individual investors to continue buying, but continued gains are not guaranteed. "AI can be transformational, but it still creates investment risks," says Richard Yashenek, chief investment strategist at Intech, an investment management firm.

Ed Zitron, CEO of the media relations and research firm EZPR, provides ample data on why to be worried. Big tech companies have invested a lot of money in AI but so far have generated relatively little revenue from those investments. For instance, he writes that Amazon will have invested $650 billion into AI by 2028. For all of 2025, estimated AI revenue was a little over $171 billion, accounting for 26% of the investment. Amazon's first-quarter 2026 data suggests $180 billion this year.

Other companies have similar outcomes so far. Moreover, much of the cash raised for AI investment has been generated by corporate bond sales. Between 2019 and 2025, companies raised a cumulative $917.8 billion in bonds, according to S&P Global Market Intelligence. That wouldn't matter if the yield of U.S. 30-year Treasurys hadn't risen to 5.2% from 2.58% in 2019.

That means all companies are paying more to borrow money. If the AI companies aren't making enough to cover their increasingly expensive debt load, they may begin to default.

Not everyone shares this fear. "Our premise is not aligning with those concerns and we think that borrowing is not a problem," says Bill Northey, U.S. Bank's senior investment director. "The data centers AI buildout will reap rewards over time. It doesn't mean all will be winners or successful."

Nevertheless, if a major AI stock defaults on significant debt, it could create a domino effect. "A lot of times you have bear markets triggered by debt problems," says Sam Stovall, chief investment strategist at research firm CFRA.

There are many historical instances of similar events: the financial crisis of 2007-2009, when the S&P 500 fell 57%, and the dot-com crash of 2000-2002, when the Nasdaq index fell 78% and didn't recover for 15 years. So to paraphrase Bette Davis, "Fasten your seat belts, we could be in for a bumpy ride."

Here are five steps older investors should take if the AI bubble bursts.

1. Don't panic

Investors must remember not to panic. Don't let your emotions become your worst enemy," says Stovall. "That can turn market volatility into a real financial loss." That advice is easy to give but difficult to follow, especially when TV and radio shows are blasting the airwaves and terrifying the audience.

So turn off the TV. The media thrives on fear, uncertainty and doubt (there's even an acronym for that, FUD).

By limiting how much media you consume, it will be easier to stand tight until the market settles, experts say.

2. Don't think you have to sell

You lose money when you sell stocks in a crash. "If you are a dividend investor, you will still get paid based on the number of shares you own ... the share prices are cut in half," says Stovall.

3. Diversify your portfolio

"A broad selloff doesn't mean a company has become less valuable, and a drawdown is not a signal to sell," says Intech's Yashenek. Having a diversified investment portfolio is important.

And it should be diversified "before things go wrong," he adds.

Warning: The stalwart S&P 500 index-tracking exchange-traded funds don't fit the bill. The large tech stocks dominate the index. If those mega stocks have problems, then all the stocks will fall, at least for a while. Look for stocks with strong cash flow, growing revenue and limited debt.

4. Rebalance or look to buy when the time comes

You'll know when the market has troughed, Stovall says. On average, when 15% or fewer S&P 500 stocks are trading above their 200-day average, then it's likely to hit bottom.

Historically, stocks that get hit the most in a market downdraft will likely recover the most as the market returns to normal. Likewise, those that had the lowest stock depreciation will have the smallest bounce back, CFRA data shows. So, it pays to buy the most pummeled stocks at the market bottom.

5. Get used to it

"Capital markets include inherent volatility; investors should expect volatility over time," says U.S. Bank's Northey.

Financial advisers should help clients understand that volatility isn't bad in the long term, but people who are retired or preparing to retire typically have a shorter risk horizon. When risk horizons are low, portfolios need to have lower-volatility assets overall.

Market volatility can be unsettling, particularly when you’re approaching or already in retirement. But the right response depends on your time horizon, income needs, risk tolerance and how your portfolio is structured. A financial adviser can help you review your investments, identify areas where you may be taking too much risk and build a plan designed to weather market downturns.

Use the tool below to connect with a vetted financial professional today:

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that's right on the money.

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Oil prices fell on a report that Iran has proposed a plan to end the war in the Middle East, and the main equity indexes finished the last day of the last full trading week of September with solid gains. But rising bond yields remain a broad concern heading into October.

According to The New York Times, Iran's "seven-day plan to cease hostilities" would reopen the Strait of Hormuz and revive negotiations over its nuclear program.

President Donald Trump also said he talked about the war with President Xi Jinping during this week's U.S.-China summit. "I think we're going to do great," the president predicted.

The front-month West Texas Intermediate crude oil futures contract was down 2.5% to $92.29 per barrel. Brent crude oil futures, the global benchmark, declined by 2.8% to $97.43.

The 2-year Treasury yield, a proxy for the direction of monetary policy, ticked down by 4.8 basis points to 4.847%. Meanwhile, the 10-year Treasury yield (-0.6 bps, 5.156%) and the 30-year Treasury yield (+2.3 bps, 5.485%) reached fresh 52-week highs on Friday.

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At the closing bell, the blue-chip Dow Jones Industrial Average was up 0.9% for the day and 0.3% for the week to 51,828. Papa Dow put an end to a three-week losing streak.

The broad-based S&P 500 added 0.5% on Friday and 1.2% for the five days to 7,743, and the tech-heavy Nasdaq Composite was up 0.5% and 2.1%, respectively, to 27,068.

Inflation expectations are up, sentiment is down

The University of Michigan Consumer Sentiment Index declined to 48.1 in September from 51.7 in August, according to revised survey results released on Friday. The revised number was up from a preliminary 47.8. But, as Surveys of Consumers Director Joanne Hsu notes, it's the lowest print for the index since May, and sentiment is down from 55.1 a year ago.

"Views of current and year-ahead expected personal finances both weakened about 10% this month," Hsu writes, "with concerns over high prices continuing to climb."

Indeed, year-ahead inflation expectations rose from 4.0% in August to 4.6% in September, the highest level since June.

"The current reading substantially exceeds the 3.4% seen in February before the Iran conflict began," Hsu observes, "along with all 2024 readings."

Long-term inflation expectations rose to 3.4% after three straight months at 3.3%.

Akamai makes an Anthropic deal

Akamai Technologies (AKAM, +3.2%) is on our list of 33 stocks that could rally 33% or more because its cloud-based platform is well-positioned for the artificial intelligence (AI) infrastructure build-out.

A new seven-year, $11.6 billion deal to provide computing power to AI model leader Anthropic underscores that premise, and the tech stock soared after the deal was announced. The contract includes an option to add another $9 billion and push the total deal value to more than $20 billion should Anthropic require more "compute."

According to Guggenheim analyst John DiFucci, the base annual recurring revenue figure is more than five times Akamai's 2025 cloud infrastructure revenue ($314 million) and 40% of its total revenue ($4.2 billion).

DiFucci reiterated his Buy rating on AKAM and raised his 12-month target price from $190 to $225.

Will MGM bet on PPLI?

According to The Wall Street Journal, MGM Resorts (MGM, -3.3%) is talking about a bid to buy People (PPLI, +11.3%). As the WSJ notes, it's "an unusual turn of events that comes just after People withdrew its own bid to buy the casino and resort company."

MGM declined by 11% on Thursday, the S&P 500 stock giving back all of the paper gains (and then some) it had seen since People's $48.30 per share offer was made public on June 1.

PPLI, with a market cap of $2.7 billion as of September 24, holds a 27% stake in MGM, which was valued at $8.5 billion through Thursday.

People's MGM stake on its own is worth $2.5 billion, "suggesting to many on Wall Street," as the WSJ observes, "that the market isn't recognizing potential value in People's seemingly disparate holdings."

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All three main equity indexes opened lower amid a continuing sell-off in the bond market, though renewed hope for peace in the Middle East inspired a modest late-session rally. Still, with interest rates rising and upward pressures on inflation persisting, investors, traders and speculators are confronted with real choices about risk right now.

By the closing bell, the tech-heavy Nasdaq Composite had climbed off its intraday lows for a 0.01% gain to 26,939. But the broad-based S&P 500 was still lower by 0.02% at 7,704, and the blue-chip Dow Jones Industrial Average was down 0.3% to 51,350.

In the aftermath of the Federal Reserve's first rate hike in three years following the September Fed meeting, New York Fed President John Williams indicated today another 25 basis point increase to the target range for the federal funds rate this year is coming.

"It's likely that another rate hike may be appropriate by the end of the year. That seems to me a reasonable way of thinking about ​it," Williams said at the London Macro Policy Forum before the opening bell.

The Labor Department (PDF) said before the regular trading session started that weekly jobless claims declined from 198,000 to 197,000, suggesting stability in the labor market.

"The economy is accelerating sharply," Siebert Financial Chief Investment Officer Mark Malek observes, citing S&P Global's Flash Composite Purchasing Managers' Index (PMI) print of 58.4 and multiyear highs for manufacturing and services. "The bond market treated the strong data as an inflation and rate risk."

Yesterday, the 10-year Treasury yield (+9.2 bps, 5.206%) broke above 5.1% for the first time since 2007, and today, the 30-year Treasury yield (+8.7 bps, 5.489%) hit its highest level since 2004.

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"Higher yields are changing the valuation equation for stocks," Malek notes. "Stocks are offering almost no earnings-yield advantage over Treasuries. With an S&P 500 earnings yield around 5.15% and the 10-year near 5.10%, investors are being compensated very little for taking equity risk."

As Malek concludes, "The biggest market risk right now may not be weak growth but excessive heat. Strong economic activity is welcome, but it makes the Fed's inflation problem considerably harder." The bottom line for the CIO: "Businesses are cooking. Households are sweating."

According to Freddie Mac, the average 30-year fixed-rate mortgage this week was 7.03%, up from 6.95% last week and 6.3% a year ago. It's the first time the average has been above 7% since January 2025.

ORCL falls on data center issues

Oracle (ORCL) fell as much as 7.7% after management of the tech stock invoked a clause in the construction contract to protect the company from cost overruns for a data center project in New Mexico. ORCL is now down 27.7% year to date.

Work on the $165 billion, 2.45-gigawatt Project Jupiter is proceeding amid significant regulatory, legal and logistical setbacks. A force majeure clause is a provision that temporarily relieves parties to a contract from performance obligations, including payment, due to extraordinary circumstances.

They're usually applied in situations such as earthquakes, fires, floods, or other "acts of God," but can also include "epidemics," "pandemics," "quarantines" or "governmental actions." Contract drafters also use catch-all provisions such as "events beyond the reasonable control of the parties."

According to Bloomberg, "Rather than trying to walk away as the site's main tenant, Oracle is attempting to put off payments should the data center dubbed Project Jupiter get derailed and fail to come online in 2028 as planned."

A spokesperson for Oracle said the project "remains on our planned schedule." A spokesperson for Blue Owl Capital (OWL, -3.7%), the parent of the project's developer, said the notice "does not change the financial commitments to this multiyear project" and that the parties are "fully aligned on Project Jupiter."

Construction of Project Jupiter is supported by an $18 billion loan syndicated among 20 or so banks, including SoftBank. Last year, OpenAI signed a $400 million contract with Oracle to support development of the New Mexico campus, as well as four other U.S. data centers.

MGM will stay public

MGM Resorts (MGM, -11.0%) was the worst-performing S&P 500 stock on Thursday after People (PPLI, -0.1%) withdrew an offer to buy the casino operator.

"There are lots of ingredients that go into a proposal of this kind on its way to completion,” People Chairman Barry Diller said in a press release. "We didn't feel the mix was coming together in the way we had hoped and have decided not to pursue taking the company private at this time."

People holds approximately 26.1% of MGM, and Diller sits on its board. On June 1, People offered $48.30 per share for the 73.9% of MGM it doesn't already own.

According to David Faber of CNBC, Diller's main concern is the significant debt load completing the deal would have created for People.

MGM traded sideways for the first half of the year, then spiked on June 1 with the offer from PPLI. The stock was down more than 25% since the offer date through September 23, suggesting the market doubted the deal's completion.

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For years, the artificial intelligence (AI) trade looked deceptively simple: Buy Nvidia (NVDA), collect the upside, repeat. That was the right call in 2023. It's a much smaller part of the story today.

To understand why, it helps to rewind further than the AI boom itself — look to 1990, when American factories made 37% of the world's semiconductors. By 2020, that share had collapsed to just 12%, according to data compiled by the Semiconductor Industry Association and the Boston Consulting Group. Analysts expect it to keep sliding as new fabrication capacity keeps getting built in Asia instead.

Chips were hardly the only casualty. Over three decades, the United States systematically outsourced or underbuilt the physical capacity behind huge swaths of its economy — power generation and grid equipment, industrial-scale manufacturing, advanced packaging, precision optics. For a long time, it was simply cheaper to let someone else own the factories.

Then the AI boom arrived, and it didn't ask permission. Big Tech's combined capital spending on data centers and AI infrastructure has gone from roughly $142 billion in 2022 to somewhere around $600 billion this year, by one widely cited industry tally — a more than fourfold increase in four years.

Alphabet (GOOGL) raised its 2025 capital budget three separate times, from $52.5 billion in 2024 to as high as $93 billion; Microsoft (MSFT) spent $34.9 billion in a single quarter, up 74% from a year earlier; Amazon (AMZN) guided to $125 billion for 2025, a 61% jump from the year before.

Goldman Sachs now projects that Meta Platforms (META), Microsoft, Amazon and Alphabet alone will spend a combined $5.3 trillion on capital expenditures between fiscal 2025 and fiscal 2030.

Put those two forces together — decades of underbuilt physical capacity meeting trillions of dollars a year in fresh demand — and you get something predictable: a chain of demand shocks, moving one link at a time through the AI supply chain, each one temporarily handing pricing power to whichever supplier happens to be sitting in the bottleneck.

The pattern is already well established. It hit GPUs first: Nvidia's full-year data center revenue for its most recent fiscal year came in at $194 billion, up 68% from a year earlier and nearly 13 times what it was when ChatGPT launched, with gross margin holding above 75%. It hit server assemblers such as Dell (DELL) and Super Micro (SMCI) next.

Then it hit power: Nuclear operator Constellation Energy (CEG) has been signing long-term supply contracts at prices running $30 to $40 above prevailing regional electricity rates, and its adjusted per-share earnings rose more than 25% last quarter alone.

It hit memory next, with Micron's (MU) high-bandwidth chips sold out through the end of the year, while gross margins have rocketed into the mid-80s from below 40% a year ago.

Now it's moving into optical connectivity and the specialized chips that shuttle data between GPUs inside a server rack.

Each shock eventually cools as new supply comes online and the crowd catches on. But the capital behind it keeps moving to the next bottleneck, and there's a lot more of it coming. PwC's Global Data Centre Outlook now projects $31.6 trillion of cumulative AI-era data center spending through 2050, with annual spending climbing from roughly $800 billion this year to $1.1 trillion by 2030 and $1.8 trillion by mid-century.

Unlike prior infrastructure booms that front-loaded spending and tapered off, this one requires the equipment inside data centers — GPUs, servers, memory, networking gear — to be replaced every four to six years, indefinitely, which is why PwC expects the annual bill to keep rising rather than fall back once the initial buildout is done.

That's the setup for the five stocks below. Each one sits on a supply-constrained bottleneck currently absorbing part of that spending — some already well into their shock, some just getting started.

GE Vernova: The power bottleneck

AI's biggest constraint today isn't chips — it's electricity, and gigawatts of new capacity don't get built overnight. GE Vernova (GEV) makes the gas turbines and grid equipment utilities need to add that capacity, and demand is outrunning what the company can ship.

In its most recent quarter, revenue reached $11.1 billion, with power segment orders up 134% and electrification orders up 66%, both organically. Management now expects its order backlog — already north of $160 billion — to cross $200 billion by the end of 2027, a year earlier than it guided at the start of the year.

Microsoft has already lined up seven of the company's gas turbines for a Texas data center project alongside Chevron (CVX), and similar deals are stacking up across the industry. The industrial stock has already made an enormous move, so consider buying dips rather than chasing new highs.

Corning: The optical pipes

Every AI data center needs physical fiber to connect its racks at the speeds modern GPUs demand, and Corning (GLW) still invents more of that fiber than any company on Earth. In its latest quarter, core sales rose 17% to $4.74 billion and operating margin expanded nearly two full percentage points to 20.9%.

Inside that number, sales tied specifically to AI data centers nearly doubled vs the prior quarter, said Edward Schlesinger, Corning's chief financial officer, in the earnings call..

Corning has also locked in a deepened fiber-optic manufacturing partnership with Amazon and a separate multiyear agreement worth up to $6 billion to wire Meta's next-generation AI data centers.

The company's own long-term plan calls for sales to nearly double, from a $20 billion annualized run rate this year to $30 billion by 2028 and $40 billion by 2030 — a bet that the fiber shock still has years left to run.

Micron Technology: The memory squeeze

No sector illustrates "sell everything you make at whatever price you want" better than memory chips right now. Micron Technology's (MU) high-bandwidth memory capacity is sold out through the end of the year, and its most recent quarterly revenue came in at $41.5 billion, up 346% from a year ago, with gross margin rocketing to nearly 85% from below 40% a year earlier.

Samsung (SSNLF) and SK Hynix (SKHY), Micron's two biggest global rivals, both expect the broader memory shortage to persist into 2027 or later.

Micron stock has already delivered a legendary run — up nearly 340% in the first half of 2026 alone — before cooling off more than 20% from its all-time high. In a shock that isn't finished, that kind of pullback tends to be the more interesting entry point, not a warning sign.

Nebius Group: The compute landlord

Nebius Group (NBIS) doesn't design chips or train AI models — it rents out the GPU clusters that everyone else needs, in an arrangement Wall Street has started calling a "neocloud."

Revenue in its latest quarter jumped 454% from a year earlier to $582 million, and adjusted profitability turned positive for the first time in the company's history.

Nebius has locked in a five-year infrastructure deal with Meta worth up to $27 billion, and Nvidia itself invested $2 billion directly into the company to help secure priority access to its future capacity.

Management's own description of the business is about as clean a definition of a demand shock as you'll find anywhere in the market: The constraint isn't finding customers, it's building fast enough to keep up with them.

Astera Labs: The traffic controller

As AI server racks pack in more and faster chips, the connections between those chips become their own bottleneck — and that unglamorous problem is Astera Labs' (ALAB) entire business.

Revenue in its latest quarter hit a record $392.4 million, up 104% from a year earlier, beating Wall Street's estimates on both the top and bottom lines. Management guided next-quarter revenue to a range roughly 30% above what analysts were modeling.

Its newest Scorpio X fabric switches only recently entered mass production and are already expected to become the company's largest product line within a quarter of launch.

JPMorgan, Jefferies and Morgan Stanley all raised their price targets by 20% or more immediately after the print. It's also the smallest and most volatile name on this list, so size any position with that in mind.

The risk worth repeating

Every AI stock on this list has already had a big run, and several — Micron, Nebius and GE Vernova among them — trade at valuations that assume the good times keep rolling with no hiccups along the way. That's simply the nature of buying into a demand shock the rest of the market can already see.

The case for owning these names isn't that they're undiscovered; plenty of professional money has already found them. It's that the capital spending behind them — an estimated $31.6 trillion in the next quarter-century, according to PwC — is nowhere near finished, and each new leg of that buildout has so far crowned a fresh winner nobody was talking about 18 months earlier.

Buy in stages rather than all at once, keep position sizes reasonable given the volatility, and remember that a demand shock eventually resolves itself as new supply gets built. The goal is to own these stocks while the imbalance is still working in their favor — not after it's already closed.

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Stocks closed lower Wednesday as Treasury yields spiked on hot inflation data. This, along with hawkish commentary from one Federal Reserve official, lifted odds for an October rate hike, with futures traders now expecting the federal funds rate to be 50 basis points higher than its current range by year's end.

At the close, the blue-chip Dow Jones Industrial Average was down 0.7% at 51,511 and the S&P 500 was 0.8% lower at 7,706. The tech-heavy Nasdaq Composite, which closed at a record high on Tuesday, slumped 1.1% to 26,936.

Stocks took a hit as Treasury yields jumped on data from S&P Global that shows rising price pressures. The 2-year Treasury yield jumped 11.8 basis points to 4.885%, while the yield on the 10-year Treasury spiked 13.7 basis points to 5.104%, its highest level since July 2007. The 30-year Treasury yield was 8.9 basis points higher at 5.391%.

S&P Global's Flash Purchasing Managers' Index (PMI) for September showed business activity expanded at its fastest pace in five years. But "severe supply chain issues" are creating massive backlogs, which gives companies pricing power, says Chris Williamson, chief business economist at S&P Global Market Intelligence. And higher energy costs "will add further to the upward pressure on selling prices and inflation in the coming months."

The PMI data follows the September Fed meeting, where the central bank hiked interest rates for the first time in three years on concerns that inflation remains elevated.

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And more rate hikes could be coming down the pike. Earlier today, Fed Governor Michael Barr — a voting member of the Federal Open Market Committee (FOMC) — said at an event in Chicago that "further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion."

At last check, CME Group FedWatch placed the odds of an October rate hike at 66%, up from 55% one day ago. The probability that the Fed will hike again in December is currently at 53%.

McDonald's suffers worst day in 2025 on inflation worries

High inflation and flat foot traffic is weighing on restaurant industry growth, said McDonald's (MCD) CEO Chris Kempczinski at the burger chain's 2026 Investor Day. And in an appearance on CNBC's "Squawk on the Street," Kempczinski warned that he's "not expecting things to change."

In the second quarter, McDonald's reported mid-single-digit growth for both its top and bottom lines, while U.S. same-store sales edged up 0.8%.

Shares are now down 12% since those results were released in early August, including today's 4.8% drop, the Dow Jones stock's worst single-day performance since April 4, 2025. But analysts think this creates an attractive risk/reward setup.

"We believe that the current share price inadequately reflects an attractive dividend and management's efforts to improve efficiency and increase the store count," says Argus Research analyst John Staszak, who has a Buy rating on the blue chip stock.

Paychex sinks on slower growth

Paychex (PAYX) also had its worst day in over a year, with the industrial stock's 8.8% loss today putting it at the bottom of the S&P 500.

The company, which provides HR, payroll and benefits services for small and medium-sized businesses, said Wednesday that fiscal 2027 first-quarter earnings rose 10% year over year to $1.34 per share, while revenue was up 6% to $1.6 billion.

The results beat Wall Street estimates but marked a slowdown from the previous quarter, when Paychex said earnings per share rose 11% from the year prior and revenue grew 17%.

The company expects fiscal Q2 revenue growth to be even slower, up 4% year over year. Chief Financial Officer Robert Lewis Schrader says this is a result of a difficult comparison to the previous year and two one-off items recognized in Q2 of fiscal 2026.

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