Market recap: Week ended October 23, 2026

Markets wavered as technology shares fell

The major North American stock markets started the week with mixed results as investors weighed inflation, interest-rate expectations and a busy corporate earnings schedule. Canada’s TSX dropped 0.7% on Monday, weighed down by losses in financial, materials and interest-rate-sensitive stocks. In the U.S., technology shares rebounded from the previous week’s sell-off. The Nasdaq gained 1.11% and the S&P 500 rose 0.41%. The Dow, which has less exposure to the tech sector, slipped 0.07%.

Canadian stocks rebounded Tuesday. The TSX rose 0.50% with gains extending across most major sectors. The U.S. equity benchmarks again turned in mixed results as encouraging corporate results and easing oil prices helped offset continued uncertainty around AI-related stocks. The Dow gained 1.02% and the S&P 500 advanced 0.28%, while the Nasdaq dipped 0.02%.

Stock markets moved broadly higher Wednesday. The TSX gained 0.60% to reach its highest closing level in four weeks, supported by strength in financial and technology shares. A $9-billion support package from the Canadian and Ontario governments for industries affected by U.S. tariffs also supported sentiment. In the U.S., renewed enthusiasm for tech and AI-related companies helped lift the Nasdaq 1.05%. The S&P 500 rose 0.58% for its third consecutive daily gain, while the Dow advanced 0.69%.

The tone shifted sharply Thursday after several earnings reports renewed concerns about AI-related spending. The Nasdaq fell 2.60%, its steepest one-day decline since June, while the S&P 500 dropped 1.21%. The Dow edged up 0.02%, reflecting comparatively stronger performance outside the tech sector. In Canada, the TSX declined 0.97% as materials and technology shares came under pressure. Oil prices also moved higher amid escalating tensions in the Middle East.

Markets declined again Friday as oil prices reached their highest level in nearly six months, adding to concerns about inflation and interest rates. Technology shares steadied after Thursday’s sell-off, but the Nasdaq still slipped 0.21% and the S&P 500 fell 0.52%. The Dow declined 1.23% as selling broadened to other areas of the market, while the TSX lost 0.52% despite gains in energy stocks. For the week, the TSX fell 1.07%, the Nasdaq declined 0.71% and the S&P 500 lost 0.47%. The Dow gained 0.41% for its third consecutive weekly advance.

Corporate earnings renewed concerns about AI spending

Investors studied corporate earnings for evidence that heavy spending on AI-related infrastructure is translating into stronger results. Third-quarter reporting followed a volatile period in the tech sector, driven partly by questions about debt-financed AI investment and whether future demand can justify the amount companies are spending.

Several early results offered encouragement. After markets closed Tuesday, SpaceX reported that third-quarter revenue increased 161%, supported by growth in its AI and Starlink businesses. Its shares surged the following day, helping renew investor interest in semiconductor and other AI-linked stocks. Netflix provided a contrast, falling more than 5% after its full-year revenue forecast disappointed investors and the company lowered its advertising-revenue outlook.

Concerns returned Thursday following Meta Platforms and Tesla results. Meta exceeded expectations, but its shares fell sharply after the company reported its first cash outflow in more than a decade amid elevated AI spending. To raise additional capital, Meta announced plans to issue non-voting shares. Tesla also declined despite positive quarterly free cash flow and a reduction in its 2026 capital-spending plans. Semiconductor shares fell broadly as investors reassessed the cost and financing of the AI investment cycle.

The reaction highlighted a divide within the earnings season. Although 83% of the S&P 500 companies that had reported results exceeded analyst expectations, investors remained particularly sensitive to signs that AI-related spending could pressure cash flow or require additional financing. The results showed that strong earnings alone may not be enough to reassure investors when expectations for AI-related companies remain high.

Canadian inflation complicated the Bank of Canada’s upcoming decision

Canada’s annual inflation rate rose to 3.1% in September, up from 3.0% in August, as higher energy costs continued to put upward pressure on consumer prices. On a monthly basis, the Consumer Price Index rose 0.1%. Gasoline prices contributed significantly, increasing 27.8% from a year earlier.

Other measures showed more moderate price pressures. Excluding gasoline, consumer prices increased 2.2% year over year, while grocery-price inflation slowed to 1.7% from 2.8% in August. Statistics Canada’s measure of core inflation also eased slightly on a monthly basis.

The report added to uncertainty surrounding the Bank of Canada’s October 28 interest-rate decision. Governor Tiff Macklem recently warned that persistently high energy prices could broaden and prolong inflation. Expectations for a rate increase grew as oil prices continued to climb last week, with financial markets pricing in a 78% probability of a quarter-percentage-point increase by Friday afternoon. At the same time, Canada’s labour market has weakened, with the economy losing approximately 68,000 jobs in September following a decline in August. Policy-makers must weigh these signs of economic weakness against continued concerns about inflation.