Nasdaq Worst Week Since June as Chip Selloff Meets $110 Brent

A week pulled in two directions

Wall Street spent the week of October 12 caught between two sets of forces. One was the hard data: a hot inflation report, a Federal Reserve with a hawkish tilt, and record semiconductor earnings. The other was geopolitics, mainly an oil market reacting to attacks around the Strait of Hormuz. By Friday the result was easy to read on the scoreboard. The S&P 500 fell 1.09% to 7,659.44 and the Nasdaq Composite dropped 2.14% to 26,140.03, leaving both indexes below their 50-day moving averages. The Dow slipped 0.34% to 52,002.41.12

The weekly figures show the split more clearly. The S&P 500 lost about 2% and the Nasdaq more than 4%, its worst week since June. The Dow gained 0.7%.12 Investopedia put the Nasdaq's weekly drop at 4.5%. That ended a four-week winning streak, and it was the S&P 500's fourth losing week in six.13 The coverage agrees on the main point: money moved out of AI-linked megacaps and into energy, financials and defensive sectors. The disagreement is over how far that rotation reached. Schwab noted on Friday morning that about 43% of S&P 500 stocks were trading above their 50-day averages, roughly double the share at the start of the month.11 That suggests the broader market was healthier than the cap-weighted index made it look, at least until Friday's late selling.

Inflation data was the first push

The week turned on Wednesday's consumer price report. September CPI came in at 3.7%, with the core rate above forecasts.41 Crypto markets reacted almost at once. Bitcoin fell below $81,000 and nearly $1 billion in leveraged positions were liquidated.46 Equities then whipsawed. On Thursday stocks opened lower on inflation worries, then recovered as Treasury yields dropped sharply. The Dow rose about 1.1% and the 30-year yield fell 10 basis points to 5.43%.16 Yahoo Finance tied part of that bond rally to a global chip selloff that sent investors into Treasurys and defensive sectors.16

The relief did not last into Friday. Schwab described the week as one of renewed inflation and debt fears, with the 10-year yield around 5.10%.11 At those levels, bonds compete directly with long-duration growth stocks.

The Fed's live October decision

The Federal Open Market Committee meets October 27–28. Its target range is 3.75%–4.00% after a unanimous 25-basis-point hike on September 16.21 Minutes released October 7 showed that most participants expected another increase to be appropriate by year end, but they gave no timing.23 The case for moving in October has weakened. Payrolls rose by only 29,000 in September against forecasts of 90,000. On October 9, markets priced roughly a 16%–18% chance of an October hike and a 75%–85% chance of one by December.26 A Benzinga premarket note on October 12 cited CME FedWatch odds of 18.8% for October.17

The sources mostly agree on the base case, a "hawkish hold" that leaves December open. J.P. Morgan Wealth Management expects no move in October but still sees 50 basis points of total tightening before the cycle ends. It also cites New York Fed President John Williams as saying there is "no need for urgency."24 The hot CPI print makes that harder to sustain. Investopedia's live coverage flagged Fed officials saying they were troubled by the inflation data.13 Sunday Guardian, summarising Reuters reporting, said fears of further rate increases were weighing on technology shares.14 The policy blackout starts October 17, so markets will not get more guidance from officials before the decision.26

Our reading: an October hike is still the less likely outcome. But oil is now the variable most likely to change that. One pre-meeting scenario analysis named Brent above $105–110 as a possible trigger for a second straight hike.26 On Friday Brent closed just under the top of that range.

Chip earnings beat, chip stocks fell

The week's sharpest contradiction came from semiconductors. ASML reported third-quarter revenue of €11.66 billion, up 55.2% year over year. Net profit more than doubled to €4.96 billion, and full-year revenue guidance rose to €44–45 billion. CEO Christophe Fouquet said customers were already discussing equipment needs for 2029 and 2030.4 TSMC's net profit rose 68.7% to a record NT$763.06 billion (about $23.6 billion). It guided fourth-quarter sales to $52.3–54.3 billion and raised its full-year growth outlook to around 44%. CEO C.C. Wei said he saw no sign of a slowdown.4 TSMC's revenue guidance was well above the $48.8 billion consensus cited by MarketBeat.10

The stocks fell anyway. TSMC's US shares closed down 1.83% at $422.15 on the day it reported.10 Forbes noted that Micron slipped after its results, ASML's early gain disappeared, and TSMC's ADRs fell despite the record quarter.1 Its explanation, which we find convincing, is that the debate has moved on from whether AI demand is real. Investors are now asking how much new capacity these profits will attract, and what that does to future margins.1 There were warning signs in the details. TSMC's gross margin fell 1.3 percentage points from the prior quarter to 66.4%.4 The company kept its 2026 capital spending at $60–64 billion and said investment from 2026 to 2028 would be significantly higher than in the previous three years.4

Asia took the hardest hits. South Korea's Kospi fell 5.46% on Tuesday and dragged on memory chip stocks.18 On Thursday Samsung Electronics dropped 9.91% and SK hynix fell 11.56%.4 Financing was the other worry. Yahoo Finance relayed one market view that Wall Street is tiring of "the Bank of Nvidia, the Bank of AMD and the Bank of Broadcom".16 Investopedia flagged continued financial concerns around CoreWeave.13 The bullish and bearish cases look at the same numbers. AjuPress read the results as proof the chip boom is far from over.4 Forbes argued that the size of the profits is what invites the supply response that could cap the shares.1 We think the Forbes argument better explains this week's price action.

Oil's geopolitical premium returned

In energy, Friday undid what had looked like a quiet week. On Friday morning, Oilprice.com described Brent as range-bound around $105. It cited a rough balance between frequent Hormuz transits and frequent Iranian drone attacks, with US Gulf output recovering after Hurricane Isaias.31 By the close, Brent had jumped 3.72% to $109.86, its highest settlement since May 19. WTI rose 3.51% to $101.41.40 For the week, Brent gained 4.9% and WTI 10.4%.40

The causes stacked up. At least nine vessels were reportedly struck near Hormuz, and missiles were intercepted heading toward Saudi Arabia's Yanbu export hub. Kpler estimated Hormuz flows at 9.4 million barrels a day, about 70% of pre-war levels. Eurasia Group raised its estimate of the chance of Middle East escalation from 35% to 65%.38 Houthi attacks on Saudi targets, including an Aramco building in Dhahran, added to the worry. So did Ukraine's plan to resume strikes on Russian refineries.34

Several policy offsets were working against that. IEA members agreed to release the remaining 100 million barrels of their emergency stock package, including 20 million barrels of diesel.32 The US Department of Energy sought bids to exchange up to 17 million barrels from the Strategic Petroleum Reserve.40 Washington also weighed easing sanctions on Russian tankers.36 ING analysts argued that only a US-Iran agreement would fully remove the risk premium.32 Friday's trading supports that view: supply measures slowed the rally but did not stop it. Energy names such as Chevron helped limit the Dow's losses that day.12

Bitcoin traded like a leveraged macro asset

Bitcoin did not act as a hedge this week. It traded as a high-beta risk asset tied to rates and oil. It moved between roughly $79,700 and $84,360, briefly fell below $80,000 on October 15–16, and recovered to around $81,500–81,700 by Saturday. That left a weekly loss of about 1%.47 Fortune's October 15 reading of $80,915 was nearly $30,000 below the price a year earlier.49 Ether held around $2,420. Reported ETF outflows weighed on sentiment across the sector.47 Dip buyers did hold the $80,000 area. Still, a narrow weekly loss in a week of hot inflation and spiking oil looks more like a market waiting for direction than one showing real strength.

What to watch

The week came down to a familiar trade-off. Strong data on AI demand could not outweigh higher yields, a hawkish Fed and an oil shock with no clear end. Three checkpoints come next: Lam Research reports on October 215, the Fed decides on October 28, and Intel reports on October 29.7 If Brent holds above $110, the oil market could end up forcing the Fed's hand.