Week 42: CPI Shock and AI Jitters Deliver the Worst Nasdaq Week Since June

Weekly Summary

Week 42 was the week the market had been dreading since the summer reprieve: inflation reaccelerated, the Fed hike clock started ticking again, and the technology complex cracked under the weight of disappointing AI revenue estimates. September CPI, released Wednesday, printed hotter across every measure — headline year-over-year rose to 3.7%, the largest monthly gain since the pandemic, with energy prices responsible for the lion's share of the overshoot. October FOMC rate hike odds surged from roughly 20% entering the week to nearly 44% by Wednesday's close — a sudden and jarring repricing of the near-term Fed path that only weeks ago had looked all but settled as a pause. The 10-year Treasury yield, which had briefly spiked above 5.30% on Wednesday, ultimately retreated to 5.097% by week's end as the market digested the data and weighed it against softer Producer Prices and marginally better-than-expected retail sales on Thursday.

The technology sector bore the heaviest burden. An FT report on OpenAI's annualised revenue (roughly $50 billion, approximately $20 billion below investor estimates circulating in the market) triggered a broad and accelerating reassessment of near-term AI infrastructure spending. The PHLX Semiconductor Index posted its eighth consecutive daily decline by Friday — the longest losing streak since 2006 — dragging the Nasdaq-100 down 5.49% on the week, its worst performance since June. The Dow Jones, by contrast, advanced 0.67% to a new intraday record above 52,000, powered by its heavier weighting in financials, energy, and consumer staples relative to technology — a rotation that crystallised in real time as the week unfolded. Bank earnings were largely positive, with Goldman Sachs delivering an extraordinary earnings beat, though JPMorgan's rare revenue miss provided a note of caution. WTI crude approached $100 per barrel by Friday — within $1 of the threshold — lifted by a massive inventory draw and continued pressure in the Strait of Hormuz.

For the Rivativ model portfolios, the week was challenging across three of the four strategies, consistent with the sharp VIX expansion and sudden equity drawdown. Predictive Gamma Strategy demonstrated meaningful relative resilience. Combined weekly result: -1.86%, versus SPX -1.95%. October month-to-date: combined +0.15%, versus SPX +0.10%.