Smart Investor: AI Sells Off, Anthropic’s IPO Outlook, and Income for Bond Investors

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This week’s highlights:

• Weekly Market Update
• Tech Stocks Sell Off as Intel, Amazon Earnings Spook Investors
• What a Wobbly AI Trade Could Mean for Anthropic’s IPO,
• Here’s What CoreWeave’s Credit Woes Tell Investors About the AI Trade
• What 7 Key Market Indicators Are Telling Investors Right Now
• Don’t Focus on Utilities Stocks’ Low Dividend Yields
• Don’t Overlook the Income Side of Fixed Income
• The Fed Kept Rates Steady in October, but We See Cuts in 2027
• What’s Happening in the Markets This Week

A dizzying drop in technology stocks sent the markets lower this week, with the Morningstar US Total Market Index posting a loss of 0.4%. The tech-heavy Morningstar Communication Services index ended the week down 5.5%, and the Morningstar US Technology index lost 1.8%.

That decline was driven by investor disappointment in the earnings results of some of the biggest firms involved in the artificial intelligence buildout, including Alphabet GOOGL/GOOG, Amazon AMZN, Intel INTC, and more. It was further evidence of Wall Street’s concerns about whether the enormous sums of money used to fund AI infrastructure will generate returns, and how soon.

Just how much appetite is left for AI? Colin Laidley explains what recent wobbles in the sector mean for Anthropic’s highly anticipated public debut, which could come as early as next month. Despite the volatility, money managers he spoke with are confident that Anthropic can stage a successful IPO.

Also vexing Wall Street these past few weeks has been the ballooning debt burden large and small firms alike have taken on to fund the AI buildout. I took a closer look at the neocloud firm CoreWeave CRWV, which saw the value of its bonds plunge on AI anxiety in the markets as its shares lost half their value. Analysts don’t see that anxiety bleeding into the broader credit market yet, but CoreWeave’s stumbles show just how much more discerning investors have become, even outside of stocks.

Also in the bond market, Morningstar Index’s Dan Lefkovitz reminds investors to think about the “income” part of fixed income. He says it’s undoubtedly been a tough year for bonds, but higher yields can also bring opportunities.

Zooming out further, Morningstar portfolio strategist Amy Arnott breaks down seven key market indicators and what they’re telling investors. Interest rates are above their historical average, as are stock market valuations, gold prices, oil prices, home prices, and the dollar.

On rising interest rates, Morningstar chief US economist Preston Caldwell offers his take about the October Federal Reserve meeting. The committee left rates unchanged, even as it set the stage for a December hike. But looking into 2027, Caldwell sees cuts.

Finally, Morningstar senior equity analyst Travis Miller, who covers energy and utilities, sat down with Morningstar Magazine managing editor Laura Lallos to discuss the opportunities he sees in utilities stocks. He says the sector’s dividend yields may be at historic lows, but enormous growth potential driven by AI data centers has changed the picture for what was once considered a low-profile, reliable income play.

As always, visit our Markets page for our latest coverage, along with our full weekly calendar of key upcoming data and events.