The Bond Market May Be The AI Trade's Biggest Challenge Yet

What happened: Technology stocks, tracked by State Street Technology Select Sector SPDR ETF (XLK), fell sharply on October 14, breaking key support levels amid rising rates and inflationary pressures. Key numbers: CPI for computers and related devices rose 9.7% year-over-year. Why it matters: AI-driven capex has reversed the sector's historical deflationary trend, and rising borrowing costs and inflation threaten AI sector margins and growth if the Fed keeps tightening.

Technology stocks, tracked by State Street Technology Select Sector SPDR ETF (XLK), fell sharply on October 14, breaking key support levels amid rising rates and inflationary pressures.

AI-driven capex has reversed the sector's historical deflationary trend, and rising borrowing costs and inflation threaten AI sector margins and growth if the Fed keeps tightening.