CoreWeave’s selloff spreads to cloud software as lower yields fail to lift tech

Lower Treasury yields did not rescue technology

Thursday’s rebound did not last. The S&P 500 fell 1.1% on Friday after gaining 0.33% the previous session. The Nasdaq opened down 0.22% and finished down 2.1%. CoreWeave’s shares and bonds kept falling, and the selling spread to cloud software stocks.^[1] Corporate bonds are loans investors make to a company. When their prices fall, investors are demanding a higher return to hold that debt. Shares can fall alongside them if investors expect financing costs to leave less profit from the AI buildout. That selling does not establish that CoreWeave has lost access to funding.

Oil and import costs offered an obvious reason to worry about inflation. Iran escalated attacks on shipping in the Strait of Hormuz as US crude prices rose.^[2] US import prices rose 1.1% in September, increasing cost pressure on import-dependent businesses.^[3] But if a fresh jump in interest rates were driving the technology selloff, Treasury yields should have risen. The 10-year yield instead slipped to 5.09%, from 5.10% Thursday and 5.22% five trading days earlier. A Treasury yield is the return available from government debt at its current price. Higher yields give stocks stronger competition and reduce what investors will pay for distant profits. Friday’s small decline offered little relief, but the weekly drop alongside technology’s 7.7% loss points away from a new Treasury-rate shock. Oil can still squeeze operating profits without yields rising.

Strong demand for AI chips does not answer the financing question. On Thursday, TSMC reported its sixth consecutive record profit as AI chip customers competed for capacity. Some investors have also lowered their expectations for Anthropic’s IPO valuation, bringing AI funding under closer scrutiny.^[4] A chip supplier can earn record profits while its customers still need to show that future computing revenue will cover equipment, construction and borrowing costs. Lower IPO expectations can also weaken the valuation comparisons supporting listed AI stocks. They do not establish weaker customer demand or an investment write-down.

The selling reached businesses with different ways of making money. Snowflake and JFrog underperformed the typical liquid stock on Friday. Data-center and computing infrastructure names including GDS, VNET and Soluna lagged that benchmark over the past 20 trading days. These are relative comparisons, not outright returns. Software valuations depend on future expansion; data-center operators must pay for capacity before it generates revenue. Both can lose market value when investors want clearer evidence that growth will cover its costs. Those price moves do not establish that every company has lost customers.

Other businesses are cushioning the index

Money also moved toward businesses less dependent on an AI spending surge. Energy gained 2.5% Friday while information technology fell 3%; utilities and consumer staples rose too. The preference has lasted beyond one session: over the past 20 trading days, energy gained 6.7% and staples gained 6.5%, against technology’s 3.1% decline. Waste Connections and National Beverage outperformed the typical liquid stock over the past five trading days, giving that shift a concrete business face. Waste collection, drinks and essential services depend on routine demand. Energy has a separate attraction: higher selling prices can help producers if production and deliveries remain intact. These gains helped the S&P 500 hold a 0.12% advance over 20 trading days despite technology’s weakness.

That cushion has not restored broad strength. Only 31% of US stocks closed above their 50-day moving average—their average closing price over the past 50 trading sessions—down from 33% Thursday. The Russell 2000, which tracks smaller companies, lost 4.9% over 20 trading days while the S&P 500 gained 0.12%. The VIX, which measures expected market swings through options prices, rose 21% Friday to 19.99, though it remained in its calm range. Trading volume was 6.8% above its 20-day average, with more activity in falling shares than rising ones. Anxiety increased, but that combination does not establish wholesale liquidation.

For investors measuring returns in Taiwan dollars, the latest currency reading offered a cushion. The US dollar rose 0.69% against the Taiwan dollar on Tuesday and was up 1.2% over the past 20 business days. A stronger dollar means a dollar of US stock converts into more Taiwan dollars, improving the local-currency return relative to the stock’s dollar return. But that reading is from Tuesday, October 13. It cannot tell us how much currency movements offset Friday’s stock losses.

What would change the reading

Watch whether AI shares regain sustained market leadership while CoreWeave’s bonds continue weakening. That divergence would undermine the financing explanation: stocks would be recovering even as debt investors demanded more compensation for funding risk. Lower Treasury yields alone do not pass that test. The next useful signal is whether the shares that followed CoreWeave lower can keep leading a recovery without its bonds recovering too.