Key takeaways
- S&P 500 and Nasdaq open lower amid AI selling
- CoreWeave drops over 4% in premarket trading
- Brent crude exceeds $110 before retreating later Tuesday
US stocks opened lower on October 20 as renewed weakness in artificial intelligence companies and oil prices above $110 per barrel unsettled Wall Street ahead of major corporate earnings.
The S&P 500 fell 0.15% to 7,679.01 at the opening bell, while the Nasdaq Composite declined 0.37% to 26,332.92. The Dow Jones Industrial Average slipped just 0.01%, highlighting the heavier pressure on technology stocks.
The AI infrastructure companies led the early retreat, with CoreWeave falling approximately 4.7% and Nebius losing 4.9% in premarket trading. However, the major indexes subsequently recovered into positive territory as corporate earnings provided support.
CoreWeave Stock Drops Again After $50 Billion Debt Concerns
CoreWeave's latest decline followed a turbulent week for the Nvidia-backed AI cloud provider, whose shares had already lost more than 22% during the previous week's trading.
Investors have become increasingly concerned about the company's financing requirements. Its borrowing costs drew attention after yields on some of its bonds exceeded 16%, raising questions about the cost of expanding AI computing infrastructure.
The selloff has been particularly striking because CoreWeave reported approximately $104 billion in contracted revenue backlog. However, those contracts represent future commitments rather than cash already received.
Its credit default swaps recently traded above 1,000 basis points, reflecting heightened investor demand for protection against potential credit losses.
Monday briefly offered relief. CoreWeave shares rallied in premarket trading after Goldman Sachs upgraded the company, but the rebound faded before the regular session ended.
The broader divergence has become increasingly visible as retail investors continue buying AI infrastructure shares while credit markets signal greater caution.
Oil Price Climbs Above $110 Before Reversing
Wall Street also faced renewed pressure from energy markets.
Brent crude climbed above $111 per barrel during Tuesday's session, reaching a five-month high amid attacks on commercial vessels and threats to Middle Eastern oil infrastructure.
The surge reversed some of Monday's relief, when oil prices declined following Washington's decision to ease restrictions on Russian energy.
Higher crude prices can increase transportation and production costs, complicating the inflation outlook and potentially reducing the Federal Reserve's flexibility to lower interest rates.
That matters particularly for technology companies whose valuations depend heavily on expected future earnings and inexpensive financing.
Recent Treasury yield increases have already intensified pressure on growth stocks, especially businesses financing data centers through substantial borrowing.
However, Brent later retreated toward $109, while US stock indexes recovered their early losses.
Stock Market Today: Corporate Earnings Help Offset AI Weakness
Despite the weak opening, broader market conditions improved as investors responded to corporate earnings.
A later Associated Press market update placed the S&P 500 approximately 0.3% higher, the Dow up 382 points and the Nasdaq ahead roughly 0.2%.
The recovery suggested that concerns about AI financing were not translating into uniform selling across US equities.
Attention now turns to quarterly results from Netflix and other major companies. Netflix entered Tuesday's report after a period of share-price weakness and significant changes to its operations.
For investors, Tuesday's reversal highlighted an increasingly selective stock market: expensive AI infrastructure remains vulnerable to financing concerns, while stronger earnings elsewhere can still support the major indexes.
