AI Spending Fears Hit Tech Stocks as Fed and ECB Hold Rates Amid Energy Shock

US tech shares fell sharply last week on AI spending worries, while the Fed and ECB both held rates with energy-driven inflation risks in focus. European stocks were expected to open higher on Monday as oil prices eased.

Maz Vantage ·

Wall Street: AI spending worries weigh on tech

US tech shares fell for a second straight day on Friday as investors questioned the scale of artificial-intelligence outlays. Intel dropped 28% after forecasting weaker fourth-quarter revenue and a continuing PC slowdown, while Alphabet slid a further 1.4% after a 12% fall the day before. The Nasdaq ended October with its worst monthly decline since March 2025, according to the BBC (BBC).

The same report says Meta, Alphabet, Oracle, Amazon and Microsoft have committed to roughly $800bn of spending in 2026. Amazon said it spent more cash than it generated, and Reddit fell 29% on weaker user figures (BBC).

Federal Reserve holds rates, with two dissents for a hike

The Fed left the federal funds target range at 3-3/4 to 4 percent on 28 October. The statement describes economic activity as expanding at a strong pace and inflation as elevated. The vote was 10-2, with Lisa Cook and Beth Hammack preferring a quarter-point increase (Federal Reserve).

Energy shock shapes the ECB and the oil sector

The European Central Bank also kept its key rates unchanged on 29 October. It said energy prices have continued to rise, posing upside risks to inflation and downside risks to growth, and that it will decide meeting by meeting (ECB).

The Guardian reports, citing AJ Bell analysis, that nine of the largest listed oil producers are on course for more than $95bn of third-quarter profit, after $96bn in the second quarter. It links this to the disruption of shipments through the Strait of Hormuz after the war on Iran. BP's $8.46bn quarterly profit was its largest since 2008 (The Guardian).

Europe and Asia on Monday

European stocks were expected to open broadly higher on Monday as lower oil prices eased inflation concerns ahead of the US midterm elections (Nasdaq/RTTNews). Ryanair reported lower second-quarter profit on lower fares and higher fuel costs, and plans an €800 million buyback (Nasdaq/RTTNews). In China, Geely said October sales were 310,183 vehicles, up 6% from September (Nasdaq/RTTNews).

Deals and crypto

Blackstone-led funds agreed to buy a 49.9% interest in a Mitsubishi subsidiary holding its LNG Canada stake, in a deal valued at $3.1bn (Nasdaq/RTTNews). Separately, investors withdrew $3.6bn from Binance after a record $6.3bn hack believed to be linked to North Korea (The Guardian).

Sources