Homebuilder rally, chipmaker selloff, and the Fed's rate decision

Homebuilder stocks rally as Treasury yields fall on AI spending doubts

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The final October consumer survey may matter most today. Its read on household inflation expectations could shape borrowing costs after the 10-year Treasury yield slid 17 basis points on Thursday.

• Consumer staples funds climbed 3.3%, an unusually large one-day move for a group that tends to move slowly. Holders could see wider swings than usual in a part of the market often seen as steady.

• Bond funds may have gained as the 10-year Treasury yield slid 17 basis points to 4.96%. Bond prices move opposite to yields, and lower yields could lift the value of bonds these funds already hold.

• CD and savings rates could drift lower over time after the 2-year Treasury yield slid 16 basis points to 4.65%. The 2-year tends to track what traders expect from the Federal Reserve's rate, and banks often set deposit rates with that in mind.

• Tech funds may have lost ground as the Nasdaq-100 slid 2.9% to close at 28,958.69. A one-day drop of that size could noticeably shrink the balance of a fund weighted toward technology companies.

1. 1

   SOXX · −6.79% Chip stocks tumble as oil and AI financing worries weigh. The iShares Semiconductor ETF tumbled 6.8% on Thursday, and the VanEck Semiconductor ETF fell 6.0%. Coherent dropped 12.5%. Reports linked the selloff to higher oil prices, worries about how AI spending is financed and a wider tech retreat. SOXL, a fund built to magnify the daily chip move, fell 20.5%. Chip funds held in retirement accounts may feel the swing. Read more

2. 2

   PG · +5.58% Procter & Gamble rallies after quarterly results beat estimates. Procter & Gamble shares gained 5.6% on Thursday, closing at $165.59. The maker of Tide, Gillette and Pampers reported fiscal first-quarter profit and sales above analysts' estimates. It also affirmed its fiscal 2027 sales and earnings outlook. The stock ended just 1.0% below its 52-week high. Reports noted margin pressure, which could test the company in the months ahead. Read more

3. 3

   Airlines · +2.98% American Airlines rises despite fuel costs forcing outlook cut. American Airlines shares rose 3.0% on Thursday after third-quarter results beat analysts' estimates. Revenue grew strongly from a year earlier, but higher fuel costs widened the airline's net loss. The company cut its full-year outlook. Fuel prices may remain a pressure point for airline profits. The stock still sits 30.6% below its 52-week high. Read more

• Topics: Energy, Markets

  NextDC cuts guidance as power delays stall a Melbourne data center

  The Australian operator deferred projects after residents opposed new power lines, showing how grid access could slow data center expansion and the AI spending tied to it.

• Topics: Models, Big Tech

  Meta says it can build superintelligence by scaling up its models

  Mark Zuckerberg told analysts that larger models are already in training, which may keep Meta's spending on chips and data centers high.

• Topics: Chips

  Texas Instruments chief says data center demand is still growing

  The chipmaker beat profit estimates and issued an upbeat outlook, and its chief executive said demand from data center customers shows no sign of slowing.

The Fed does not set mortgage rates. The Federal Reserve sets the Fed funds rate, the overnight rate banks charge each other. It does not set the 10-year Treasury yield, the return investors demand to lend to the government for a decade. Buyers and sellers of those bonds set it, and mortgage rates tend to follow it. Today, money moved out of AI-linked stocks and into Treasuries, pulling that yield lower. Homebuilder D.R. Horton surged 6.2%. This split tends to matter again before each Fed meeting and whenever mortgage rates make news.

Fed funds rate in the glossary

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The big picture. Thursday's losses were narrower than the indexes suggest. AI spending doubts hit technology. Yet more stocks rose than fell, as consumer staples, utilities and health care gained. The Nasdaq-100 has fallen 4.8% in October. The S&P 500 has still edged up 0.1% this week. Treasury yields fell too. When bond prices rise as stocks slip, a mix of both may cushion a portfolio.

On the calendar. The Fed's rate-setting committee opens its meeting on Tuesday, Oct. 27. The chair's press conference follows on Wednesday, Oct. 28, 2:30 p.m. ET. Comments on future rates could matter to savers earning interest on cash, not only to borrowers.