AI Suffers, Oil Surges

Intro

Mark Zuck got hurt this week (there’s a better verb that could be used, which rhymes with “Zuck” but I fought the urge to do it). Anyways, $META tanked 9.41% at the close of this week, and they weren’t the only ones who took a beating. Credo Technologies $CRDO fell 13.21%, Lam Research $LRCX fell 12.82%, and the list goes on. But why? The answer is the same as it was during the dot-com era, as well as every other technological revolution in history, or at least since there’s been a stock market. That answer is whether or not investors believe that the exorbitant investment into that technology will bring a meaningful return.

Meanwhile, investors clearly flocked to safety via U.S. Treasuries. The 10Y yield has dropped to 4.99% (still high) from 5.36%, and the 30Y has dropped to 5.33% (also still high) from 5.73%. Sure, I could opine about the fact that the AI bubble is clearly losing steam, or the fact that bonds yields are falling off a cliff, that business is slowing, the fact that my HCRI recession indicator flagged a watch signal in March, and that overall it seems we’re heading for a recession. However, I’ll save you that this week. Let’s get into it.

What Happened

• AI Stocks got hit hard

• Treasuries surged and yields tanked as investors flee to safety.

Why It Matters

Okay, I lied, I told you I wouldn’t get all doom-and-gloom, but I am. The title of this newsletter says that oil surged, which is true. In fact, Brent Crude rose 6.24% on the week, marking its largest weekly gain in a month. This story seems like it’s par for the course at this point right? AI takes a beating, oil rises, and yields… rise? Ah, but yields didn’t rise did they? They collapsed. Herein lays the distinction.

When oil prices surge, yields should surge along with them. Yet, that didn’t happen this week.  Despite Brent crude surging 6.24%, the 10-year Treasury yield fell 9 basis points to 5.00%, while the 30-year yield dropped 10 basis points. That's a significant divergence, and one you shouldn't ignore. Higher oil prices threaten to increase transportation costs, squeeze corporate profit margins, and put renewed pressure on consumer spending. Under normal circumstances, those inflationary risks would create upward pressure on bond yields.

Instead, investors rushed toward the relative safety of U.S. Treasuries, driving bond prices higher and yields lower. This suggests the market may be growing more concerned about the economic damage caused by elevated energy prices than inflation itself. Meanwhile, the selloff in AI and technology stocks only adds to the growing uncertainty surrounding economic growth.

What Can You Do?

With oil prices climbing, technology stocks selling off, and Treasury yields falling, you should be thinking about managing risk rather than chasing returns.

• Reevaluate your exposure to AI and technology. The long-term growth story remains intact, but elevated valuations leave little room for disappointment. Companies with strong cash flow and manageable debt may be better positioned to withstand continued volatility.

• Pay attention to the bond market. Falling Treasury yields alongside rising oil prices could indicate growing concerns about economic growth. Watch whether the 10-year yield continues declining, particularly if equities remain under pressure.

• Consider defensive positioning. Sectors like healthcare, consumer staples, and utilities have historically offered some resilience during periods of economic uncertainty. Short-term Treasuries may also provide an attractive way to earn income while maintaining liquidity.

• Keep some flexibility. Market corrections can create opportunities, but there's no need to rush. Maintaining available capital allows investors to take advantage of attractive valuations if selling continues.

In short

• AI stocks stumbled: Investors grew increasingly concerned about elevated valuations, massive capital spending, and the sustainability of AI-driven growth.

• Oil prices surged: Brent crude climbed 6.24%, raising renewed concerns about inflation and pressure on consumers and businesses.

• Treasury yields fell: Despite rising oil prices, the 10-year yield dropped 9 basis points, suggesting growing demand for safer assets.

• Growth concerns are mounting: The divergence between oil and bond yields suggests investors may be more worried about slowing economic growth than inflation.

Thanks for reading! Until next time, good luck our there and Godspeed.

Disclaimer

This note is published by Pioneer Financial, LLC for research and education only. It is not investment, tax, or legal advice, and it is not a recommendation to buy, sell, or hold any security or to trade in any session, including overnight or extended hours. Pioneer Financial is not a broker-dealer and is not a registered investment adviser. We do not manage your money. Markets can and do lose value; you can lose money. Always do your own work or consult a qualified adviser who understands your situation. Past performance and historical or hypothetical examples are not a guarantee of future results.

Sources and Further Reading

Associated Press. (2026, October 22). Sharp drops for AI stocks overwhelm markets worldwide as oil prices jump. https://apnews.com/article/33767691a4a0730b96d6f0c5100ea9b2

EnergyNow Media. (2026, October 23). Oil surges to six-month highs as Middle East attacks intensify. https://energynow.com/2026/10/oil-surges-to-six-month-highs-as-middle-east-attacks-intensify/

Jao, N. (2026, October 23). Oil prices jump $3 on Houthi attacks, oil spill, highest settlement since April. Reuters. https://au.investing.com/news/commodities-news/oil-little-changed-as-supply-concern-lingers-amid-houthi-attacks-on-saudi-arabia-4709687

Reuters. (2026, October 22). Trading day: Maximum pAIn. https://www.reuters.com/commentary/reuters-open-interest/global-markets-trading-day-graphic-2026-10-22/

U.S. Department of the Treasury. (2026). Daily Treasury par yield curve rates: October 2026. https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?field_tdr_date_value=2026&field_tdr_date_value_month=202610&type=daily_treasury_yield_curve

U.S. Energy Information Administration. (2026, October 6). Short-term energy outlook. https://www.eia.gov/outlooks/steo/report/