On October 24, amid the ongoing escalation of capital expenditures by AI behemoths, the market began to cast doubt on the profitability of these investments. This skepticism weighed heavily on the tech segment of the U.S. stock market, prompting a surge of capital into the U.S. Treasury market. The Nasdaq 100 index experienced its most significant two-week slump since April 2025, with a portfolio of AI-linked stocks plummeting by 4.9% this week alone. Notably, Meta's stock price took a nosedive, plummeting more than 9% in a single week. Initially, the yield on 10-year U.S. Treasuries soared to 5.14% early in the week, only to swiftly retreat, closing at 4.97% on Thursday—marking the first time it dipped below the 5% threshold in a month. Bond ETFs witnessed inflows of roughly $58 billion this month, representing 38% of all ETF inflows, a clear sign of heightened investor caution.

The primary concerns in the market stem from the concurrent surge in financing requirements by AI firms and governments globally, vying for a finite pool of capital. This competition is intensified by the U.S. government's relentless debt issuance, further straining the already tight capital supply and demand dynamics. Stress indicators have also surfaced in the credit market, with credit risk metrics for U.S. investment-grade corporate bonds climbing to their peak since March, and yields on CCC-rated bonds soaring to 15.85%—the highest level since 2020. As the cost of capital escalates, companies with weaker financial standing are likely to feel the pinch first, leading the market to reevaluate the risks associated with high-valuation assets.