Podcast
AI, Interest Rates and Midterms
Will Simpson and Greg Wise
October 31, 2026
Understanding the forces at play in markets, the economy and your portfolio
I think the tone here is a bit of a take a deep breath and step back kind of week. The AI trade, which has been driving markets higher for much of the year, is showing some cracks, and investors are becoming increasingly unforgiving of anything short of perfection. We saw some major moves on the earnings front, with Intel down 34% on the week, Google off 15%, Amazon down 6%, and even Microsoft, despite a strong earnings report and initial pop, finishing 4% lower. The Nasdaq 100 has now entered correction territory, falling more than 10% from its recent highs. The weakness is also spreading beyond the U.S., with other AI-heavy markets like Japan and South Korea struggling too.
Zooming in on this week, the Nasdaq was down 3.1%, while the S&P 500 and TSX fell 1.4% and 1.1%, respectively. Japan and emerging markets also struggled, down 2.3% and 2.5%. One notable bright spot was Europe, which managed a 0.3% gain while most major regions finished in the red. European equities continue to demonstrate some valuable diversification benefits when the AI trade comes under pressure. Sector performance told a similar story, with technology and materials among the weakest areas in both Canada and the U.S., while more defensive areas like healthcare and utilities held up relatively well.
Earnings season continues next week with some big names reporting. Apple kicks things off Monday, followed by AMD on Tuesday and Qualcomm on Wednesday, offering another look at AI and semiconductor demand. Uber, Airbnb and Lyft also report throughout the week, providing some insight into consumer spending and travel trends.
Beyond earnings, Tuesday’s midterm elections will be another key focus for markets, with control of both the House and Senate up for grabs. Democrats have gained some momentum in recent polling, making for a potentially close result. The big question is will the midterms matter for markets? I think the answer is probably yes, but let’s be real, all eyes will be on AI earnings.
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