Market Midday: Stocks Fall, AI Trade Worries Grow, Inflation Rises • 10/29/26

0:01CNBC Business News Update Market Midday. I'm Jessica Ettinger. Wall Street's in the red this afternoon. Some investors are starting to question the AI trade. The major averages are off their earlier lows, but the Dow is down 143 points. Google parent Alphabet down 11 percent this afternoon, leading that Dow lower. Alphabet disappointed with quarterly results after the closing bell last night as investors worry that AI is taking away search from Google. S &P 500 index down 20 points. The Nasdaq down 317 points. That's one and a quarter percent. Chipmaker shares have turned mixed this afternoon.

0:44When it comes to the AI trade, here's a take from Newburger's Stephen Eisman with CNBC's Becky Quick. You've said you think the entire market is dependent on the AI trade. Why are you not willing to take that next step to say the market's going to come down substantially? It's a good question. I think it's a scary bet to make because so much of the market is on the other side. And it's still reading tea leaves. I think we're getting closer. I think the numbers from Google scared people. The numbers from ServiceNow scared people. It's all pointing in that direction. I'm just not quite sure when the tipping point is.

1:25And a different take on the overall picture of the markets from Aries CEO Michael Abragetti on CNBC. There's a lot to be anxious about in the world. I get it. Geopolitics, rates, inflation, elections. But when you look at what's happening in the credit markets, bank loan market, high yield market, investment rate market, private credit, the banks, the card companies, You can't really find anybody who is saying that there are credit issues in the system. We just had a nice GDP print. The economy is strong. So I think the market is not differentiating well enough between forward-looking anxiety and what we're actually seeing in the core portfolio.

2:06He mentioned GDP, that's gross domestic product, a measure of U.S. economic growth. And GDP did come in at a better than expected 3.4 percent as the AI spending and build-out rolls on. But the inflation picture got worse in September. It rose again in the new PCE, Personal Consumption Expenditures Report. Full PCE up almost a half percent from the month before. It was the biggest monthly gain in inflation since March. Year over year, inflation jumped the most since May, sitting at 3.6 percent. Fewer people applied for unemployment benefits in the U.S. last week, 194 ,000, the lowest since mid-July.

2:47Eli Lilly would blow out quarterly results, increasing its sales outlook as demand surges for its diabetes and weight loss, GLP-1 medicines like ZepBound and Manjaro. But still, some people who need the drugs can't get them because they're still too expensive. Here's Lilly CEO David Ricks on CNBC. Coverage and programs like the Medicare Bridge program are key. And so far, if we look at first and second fills for patients who are seniors in that program, the drop-off is very low. Similar when you have consistent access through your employer and Medicaid. So I think the key story here isn't that people don't tolerate the drugs over time.

3:29They worry about the affordability. We need more access and coverage. We're working on that. DoorDash buying Instacart for$17 billion. Powerball jackpot topped three quarters of a billion dollars for this Saturday night. No winner last night. The new jackpot,$760 million. I'm Jessica Ettinger, CNBC. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading.

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