Money Simplified

The Weekly Market Update

17 October to 23 October 2026

This week two bills arrived at once: the one for the AI boom and the one for expensive oil. Nervous money ran for the safety of government bonds.

Meta told investors it will spend up to $145 billion this year on AI and, for the first time in more than a decade, spent more cash than it took in. Its shares fell 7% in a day, chip makers had their worst day in months, and the interest rate on American government debt dropped below 5% as people sold shares and bought bonds instead. Oil did the opposite of calming down. Brent crude closed the week at $116.72 a barrel, its highest finish in six months, after Houthi attacks on Saudi Arabia sent Aramco’s staff home and American diplomats out of the country.

Elsewhere, Tesla made less profit but far more cash than anyone expected, SpaceX set out to become America’s fourth mobile network, and British inflation rose to 3.5% with the Budget now four days away.

Markets at a glance

Figures as at the close on Friday 23 October 2026. The Week column is measured from the previous Friday’s close, 16 October 2026. Yearly changes are the 12 month change from Trading Economics, except the mortgage rate, which is Freddie Mac’s year-ago figure. For interest rates and bond yields, both change columns are shown in percentage points, so a move from 5.10% to 4.99% is −0.11 points. A bond yield is simply the yearly return a lender earns for lending money to the government, and it falls when more people want to buy the bonds. Green means the number went up, red means it went down, whatever that means for your wallet.

01 · Markets & Rates

Shares wobbled, the 10 year rate fell below 5%, and the Fed meets on Wednesday

What happened. On Thursday the technology-heavy Nasdaq fell 2.6%, its worst day since June, and the main index of chip makers lost 6.7%. The trigger was Meta’s spending plan, which is the next story, but the selling spread quickly to Nvidia (down 4.4%), Amazon (4.6%), Alphabet (3.2%) and Microsoft (2.2%). The money went into government bonds. The interest rate on 10 year American debt, which falls when more people buy the bonds, dropped 0.17 points in a single day, its biggest one-day fall in more than a year, to 4.96%. It ended the week at 4.99%, down from 5.10%. Friday brought a different worry. Oil jumped again, and the Dow fell 653 points, or 1.2%. Over the week the S&P 500, the index that tracks 500 of America’s biggest companies, closed at 7,624, down 0.5%, its second weekly fall in a row. The Nasdaq lost 0.7% while the Dow, which has fewer technology companies in it, managed a 0.4% gain. Company profits are not the problem. With about a third of the S&P 500 still to report, third quarter profits are on track to be more than 32% higher than a year ago. The Federal Reserve meets on Tuesday and Wednesday. The market now puts the chance of a rate rise next week at around one in ten, down from more than one in three at the end of September, and still expects one in December. Mortgages followed bond rates down. Freddie Mac’s average 30 year rate fell to 7.32% from 7.40%, against 6.19% a year ago.

Why it matters. A fall in bond rates sounds like good news, and for anyone taking out a mortgage it is. But it is worth being clear about why it happened. Rates fell because investors were frightened and wanted somewhere safe to put money, not because inflation is beaten. American inflation is 3.7% and oil has just hit a six-month high, which argue the other way. That leaves the Fed in an awkward spot. It is expected to hold its rate at 3.75% to 4% on Wednesday while inflation runs well above its 2% target, partly because the economy is showing strain. Consumer confidence is close to a record low. The nervousness in shares is not about this quarter’s profits, which are strong. It is about how much of those profits are now being spent building AI, and when that spending starts to pay.

What to watch. The Fed’s decision on Wednesday 28 October, and what chair Kevin Warsh says about December. Alphabet, Microsoft and Amazon all report next week, and the number everyone will listen for is how much each plans to spend. The Fed’s preferred inflation measure is published on Thursday 29 October. And the American midterm elections are on Tuesday 3 November.

02 · AI & Technology

Meta’s $145 billion AI bill was the moment the market blinked

What happened. On Wednesday evening Meta, which owns Facebook, Instagram and WhatsApp, reported sales up 26% to $64.6 billion, more than analysts expected, and its shares rose in after-hours trading. Then investors read the rest. Meta spent $34.9 billion on data centres and chips in three months. For the first time in more than a decade it spent more cash than its business generated, a shortfall of $2.1 billion. It raised its spending plan for this year to between $135 billion and $145 billion, having previously said at least $130 billion. And it will create a new class of shares with no voting rights from January 2027 to help pay for growth. On Thursday the shares closed down 7% at $648.85, their biggest fall since July, and the cost of insuring Meta’s debt against default rose to a record. The companies that sell the equipment fell harder. Lam Research, which makes chip-making machinery, closed down 11.8% after its finance chief mentioned supply constraints. Intel and AMD each lost 8%. The main chip index fell 6.7% and is now more than a quarter below its June record. CoreWeave, last week’s worry, fell another 10%. Nvidia’s chief executive, Jensen Huang, said demand for computing capacity was “off the charts”. The shares fell anyway. One oddity on Friday: Apple briefly overtook Nvidia as the world’s most valuable company, with both worth about $5.1 trillion, a reminder that Apple has spent far less on AI than its rivals.

Why it matters. Last week the worry was about companies that borrow to build AI computing. This week it reached the companies that have been paying from their own pockets. Meta’s profits are enormous, and they no longer cover its building programme. The gap is being filled with borrowing and, soon, new shares. If that is true for Meta, investors are asking, is it true for Alphabet, Microsoft and Amazon too? This matters beyond the technology industry. Nvidia, Apple, Microsoft, Alphabet, Amazon and Meta make up a very large slice of the S&P 500, so most pension funds and index trackers own them whether their holders know it or not. When they wobble, everyone’s savings wobble. It is worth keeping the scare in proportion. Meta expects sales of $73 billion to $76 billion in the final quarter of the year, so the advertising business that pays for all this is in good health. The argument is about the size of the bill, not whether AI is real.

What to watch. Alphabet, Microsoft and Amazon all report next week. Their spending plans for 2027 will move the whole market. The chip index, which has become the thermometer for the AI trade. And whether Meta’s shares find a floor.

03 · Geopolitics & Energy

Oil hit a six-month high as Houthi attacks pushed Saudi Aramco out of its own headquarters

What happened. Brent crude, the main international oil price, closed on Friday at $116.72 a barrel, up 3.1% on the day and 6.2% on the week, its third weekly rise in a row and its highest finish since April. It was below $97 at the start of October. The pressure came from Saudi Arabia, the world’s biggest oil exporter, rather than from the Strait of Hormuz. Yemen’s Houthis, who are backed by Iran, have spent two weeks firing drones and missiles at Saudi airports and oil sites. On Wednesday an attack on King Fahd airport in Dammam, in the oil-producing east of the country, killed two people and injured eight. The same day a drone aimed at an Aramco facility at the Shaybah oil field was shot down, and falling debris killed two people. On Thursday Aramco, the state oil company, ordered the full evacuation of its headquarters in Dhahran and told remaining staff to work from home until further notice. The same day the American State Department ordered non-emergency staff and their families to leave Saudi Arabia, and officials said the military has been quietly thinning its presence at bases across the region. Britain committed RAF Typhoon jets to help defend Saudi Arabia. On the wider war, President Trump said on Friday that “we could end it very quickly”, called Iran “a failing nation” and repeated that there would be no new strike before the midterm elections, while weighing whether to let the conflict “wither”. America’s ambassador to the United Nations, Mike Waltz, told the Financial Times the war could last another year. Iran, for its part, claimed on Friday to have halted all “non-compliant” ships in the Strait of Hormuz.

Why it matters. Oil is up about 20% this month, and that feeds straight into petrol prices, inflation figures and central bank decisions on both sides of the Atlantic. British inflation is 3.5% and American inflation 3.7% largely because of fuel. The geography matters. Until now the damage to oil supply has been at the Strait of Hormuz, the Gulf’s eastern exit. The Houthis sit beside the Red Sea, the western one, and their attacks now reach the Saudi Eastern Province where most of the kingdom’s oil is produced. Both routes out of the Gulf are in question at the same time. That is why, on a day when almost everything else fell, American energy shares rose 2.5% to a record high on Friday. The political signal is mixed. Trump says no strikes before 3 November, and reports say America and Israel are planning fresh strikes afterwards. Markets are pricing the second part.

What to watch. Whether Brent holds above $115. Israel’s election on Tuesday 27 October and America’s midterms on Tuesday 3 November, the dates the region is working around. Any sign of American or Saudi strikes on the Houthis, and Hormuz shipping counts. And next month’s inflation figures, which will carry October’s oil price.

04 · Business & Economy

Tesla’s profit fell 43%, SpaceX made $4.4 billion, and the two may yet become one company

What happened. Elon Musk’s two listed companies reported within a day of each other. On Tuesday SpaceX, which joined the stock market in June, said quarterly sales rose 161% to $14.6 billion and it made a profit of $4.4 billion, nearly three times what analysts expected, after a loss in the spring. Starlink, its satellite internet service, is the main earner. On the same call Musk confirmed that the boards of Tesla and SpaceX have each set up special committees to explore combining the two companies. He said no terms had been agreed and that winning a majority of Tesla shareholders would be “quite a high hurdle”. On Wednesday Tesla reported sales of $28.05 billion, flat on a year earlier, and a profit of $787 million, down 43%. Income from selling emissions credits to other car makers fell 73%. Yet the cash numbers surprised everyone the other way. Analysts expected Tesla to burn through about $4.5 billion in the quarter; instead it generated $1.5 billion. It also cut its spending plan for this year to about $20 billion from more than $25 billion, and said it will not touch a new $30 billion borrowing facility this year. Deliveries of 486,532 cars were down 2% but better than feared, and 1.74 million drivers now pay for its self-driving software, up 67%. The first customer cars joining the robotaxi fleet without a safety driver are now pencilled in for “around Q2 next year”. The shares closed down 3.1% on Thursday at $374.58. Then on Friday Bloomberg reported that SpaceX is in talks to use at least 80,000 mobile phone masts to build America’s fourth mobile network. AT&T closed down 8.0% and T-Mobile 7.7%, while Crown Castle, which owns masts, jumped.

Why it matters. Tesla is becoming two businesses: a car maker whose profits are shrinking, and a robotics and self-driving project that is being funded carefully rather than lavishly. Cutting the spending plan reassured investors about cash and worried them about ambition at the same time, which is why the shares fell on a profit beat. For anyone who owns Tesla shares, directly or through a fund, the merger committees are the bigger news. A deal would mean swapping shares in a car company for shares in a rocket, satellite and AI company that is now profitable on a large scale. Musk’s own words suggest the shareholder vote is the hard part. The phone network story shows how far SpaceX’s ambitions now run. A real rival to the big three carriers is years away, analysts at Bernstein said, but the mere possibility was enough to knock 8% off AT&T in a day.

What to watch. Any formal merger proposal before Tesla’s annual shareholder meeting, which analysts expect by early December. Whether SpaceX confirms the mast deal. And Tesla’s robotaxi timetable, which has slipped before.

05 · Personal Finance

British inflation rose to 3.5%, a November rate rise looks “a done deal”, and the Budget is on Wednesday

What happened. A heavy week of British figures. On Tuesday the Office for National Statistics said unemployment fell to 4.7% in the three months to August from 4.9%, the lowest in a year, while regular pay grew 3.7%, or 0.8% after inflation. The catch was vacancies, down to 691,000, a five-year low. On Wednesday came inflation. Prices in September were 3.5% higher than a year earlier, up from 3.1% in August and the highest in almost a year. Forecasters expected 3.4%. Motor fuel is up 29.8% on the year and diesel is at its dearest since July 2022, while food inflation is a modest 1.3%. The measure that strips out food and energy rose to 2.8% from 2.6%. On Friday retail sales were reported down 0.4% in September, worse than the 0.1% fall expected, as warm weather hit sales of autumn clothing, and a GfK survey showed consumer confidence dropping 11 points in October to minus 24. Markets now expect the Bank of England to raise its rate from 3.75% to 4% on Thursday 5 November. David Rees of Schroders said a rise “now looks like a done deal”. Two numbers from this week are already locked in for April. The state pension is set to rise 3.9% to about £250 a week, and September’s 3.5% inflation rate is normally used to raise many benefits. The Budget, Chancellor John Healey’s first, is on Wednesday 28 October. Reported ideas include a fuel duty freeze, a higher tax surcharge on banks, a lower starting point of £1.5 million for the mansion tax, which is said to be under reconsideration, a bigger business rates discount for small firms and an extra £100 on the Warm Home Discount. None is confirmed.

Why it matters. If the Bank raises rates on 5 November, anyone on a tracker or variable mortgage pays more the following month. Fixed-rate deals have largely priced it in already, so the shock there is for people coming off cheap deals from 2021 and 2022. Savers are still ahead of inflation, but only just. The average savings account pays about 3.8%, three tenths of a point above the 3.5% inflation rate, and that gap narrows every time inflation ticks up. The retail and confidence figures matter for the Budget. People are pulling back before they know what it contains, and with borrowing costs high the Chancellor has less room than he would like. Expect tax rises of some kind; wait for the actual document before acting on any leak.

What to watch. The Budget on Wednesday 28 October, and how the gilt market reacts to it, since that sets the tone for mortgage pricing. The Bank of England on Thursday 5 November. October’s inflation figure on Wednesday 18 November, which will carry this month’s oil price.

Also worth knowing

Gold fell below $4,000 for the first time since July. It closed the week at $3,994 an ounce, down 4.1%, as the prospect of interest rates staying high for longer made an asset that pays no interest less appealing. It is now 2.9% lower than a year ago.

Moderna fell 17.6% on good news. Its cancer vaccine, developed with Merck, cut the risk of melanoma returning or death by 42% compared with the standard treatment alone, according to trial results that emerged on Thursday. The shares had already more than doubled on an early version of the data in August, so investors took profits.

American Express is cutting about 3,500 jobs, around 5% of its staff. It announced the cuts alongside a 9% rise in quarterly revenue to $14.5 billion and a higher profit forecast. The shares closed down 3.7% on Friday.

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This newsletter is for educational purposes only and does not constitute financial advice. Figures as at the close on 23 October 2026.