Interest rates retreat, tech comes under pressure; crude oil rises on increased Iran risk
Daily Briefing 2026-10-23
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On Thursday (2026-10-22) U.S. stocks fell, SPY down 1.18%, QQQ down 2.86%. Long-term interest rates have actually been retreating over the past week, but the selling pressure on tech stocks was heavier, indicating that interest rates were not the factor that dragged tech stocks down that day.
What's new today
The biggest contrast on Thursday was between rates and the stock market. The market logic of the past few days was: the war pushed up oil, higher oil pushed up inflation concerns, long-term rates rose, and growth-stock valuations were compressed. That chain did not appear on Thursday. The 10-year U.S. Treasury yield fell to 4.96% (as of 10/22), down 0.14 percentage points over the last 5 trading days, yet tech stocks fell more sharply. Chip ETF SOXX dropped 6.79% in one day, SMH fell 5.99%, and over the past 20 trading days they have cumulatively declined 15.97% and 12.85% respectively. However, after subtracting price increases, lending to the U.S. government for ten years still yields a net return of 2.76% (as of 10/21), 0.13 percentage points higher than a month ago, which remains a hurdle for assets that take many years to generate profits. At present, no reports attribute this round of selling directly to any single piece of news.
The decline also spread into already volatile corners. Gold-miner ETF GDXJ fell 6.75%, silver-mining ETF SIL fell 6.65%, Korea ETF EWY fell 4.98%, and bitcoin-mining concept WGMI fell 8.09% in a single day. These instruments have fallen between 15% and 40% over the past month, and Thursday accelerated those declines. On the same day, gains were concentrated in defensive and domestic-demand sectors: consumer staples ETF XLP rose 3.31%, retail ETF XRT rose 2.92%, medical device ETF IHI rose 2.71%, and regional bank ETF KRE rose 2.53%. As a result, SPY’s decline was only about 40% of QQQ’s.
A new timeline emerged on the oil front. A person familiar with operational plans told NPR that the U.S. and Israel are preparing for a possible attack on Iran in early November, after the U.S. midterm elections, and Iran said it was prepared. Trump and Netanyahu had also publicly hinted that this option was on the table. On the same day, an airport in Saudi Arabia was attacked, causing one death. Signs of a further escalation add another layer of uncertainty to already tight supply. Brent crude rose to around $111 on Thursday, WTI near $99, with BNO (tracking Brent) up 2.77% in one day and up 6.24% over the past 5 trading days.
The stock-market sell-off and the oil-side escalation were not linked together in any report on Thursday; the two events must be considered separately. What can be confirmed is that the usual explanation — rates — temporarily failed, and the model’s view on tech stocks adjusted accordingly. Below I discuss each item in turn.
Other things worth knowing
The first point ties into the oil shock. Andrew Bailey said that UK businesses are cutting costs to cope with the energy shock from an Iran war. UK inflation has risen to an 11-month high; Bloomberg reported the Bank of England is considering a rate hike, and The Telegraph said confidence is collapsing at an astonishing pace ahead of the budget release. Raising rates would increase the burden on businesses; not raising rates lets inflation rise, leaving the UK stuck between two challenges.
The second item is unrelated to the above main thread. U.S. household health insurance premiums rose 9% this year, and the number of Americans without insurance channels is also increasing. IHI rose 2.71% on Thursday, but a market commentary ran the headline "Rising health stocks flash a market warning."
Tracking the oil shock
The premium of Brent spot over futures has averaged $13.2 over the past 5 days, versus $17.1 a month ago, easing somewhat. The near-month versus sixth-month futures spread and the diesel crack spread are roughly unchanged from a month ago. Tanker transit through the Strait of Hormuz remains near a standstill, only 1.3% of prewar norms (as of 10/18), so the supply shock continues.
By asset
| Asset | Today's driver | Situation | Key read | Related ETF |
|---|---|---|---|---|
| Crude futures | US and Israel preparing a possible attack on Iran in early November | Brent around $111, higher over the last 5 days | BNO 5-day +6.24% | BNO, XLE |
| U.S. Treasuries | Long-term rates retreat, decoupled from equity sell-off | Yields remain elevated, down over the last 5 days | 10-year 4.96% (10/22) | — |
| Tech stocks | Rates down but selling pressure remains heavy | Sharp single-day drop, down over the last 20 days | SMH 1 day -5.99%; QQQ 1 day -2.86% | SMH, QQQ |
| Gold and silver mining | Not the main theme today: large same-day drops | Cumulative decline over 20 days exceeds 15% | GDXJ 1 day -6.75%; SIL 1 day -6.65% | GDXJ, SIL |
| Consumer staples | Not the main theme today: gains concentrated in defensive sectors | Big single-day gain | XLP 1 day +3.31% | XLP |
Today's logic: speculative positions cut, why is oil still rising?
Speculative positions in crude futures refer to accounts that trade contracts without taking physical delivery. The U.S. futures regulator's position reports show their net longs (the number of long contracts exceeding shorts) have retreated over the last four reporting periods from about 102,000 contracts to about 40,600 contracts. Prices, however, did not reverse because pricing power lies with buyers holding physical product. Imagine speculators leaving the wholesale market while restaurant kitchens still need to cook tomorrow; purchasers must buy at spot or even pay a premium. Brent spot was $115.22 on 10/20, $6.43 above near-month futures at $108.79, and buyers in a hurry are willing to pay extra. A current example is BNO up 6.24% over the last 5 trading days, and XLE has seen about $640 million in net inflows since 10/15.
How the ETF Radar model sees it
XLE: Up 3.26% over the past 8 trading days (this is the model data window, not 5 days). The transmission chain: elevated war risk supports oil, improving cash flows for upstream and integrated oil companies, benefiting XLE. WTI near-month contract $101.04, 12-month contract $82.83, with the near-month clearly more expensive, indicating current tightness. Note that option implied volatility is at the 98th historical percentile, meaning option prices show the market expects large future volatility and hedging costs are high; the predictive market assigns about a 0.78 probability of a ceasefire before 10/31, which also limits the persistence of the shock. The ETF Radar model’s directional view for the next 1 to 3 months is positive.
SMH: Down 6.35% over the past 5 trading days and down 12.85% over the past 20 trading days. Looking forward, the ETF Radar model’s directional view for the next 1 to 3 months is positive. The transmission chain: Nvidia prioritizing "meet capital expenditure first, then buybacks and dividends" boosts demand expectations for chip-equipment vendors, foundries, and memory makers, benefiting companies held in SMH. Another read is that DRAM spot prices continue to rise; DDR5 16Gb specification is up 22.08%. The past week's decline runs counter to the model’s direction; the market is not yet convinced, and the model focuses on the next 1 to 3 months, which has not yet materialized.
QQQ: Down 3.23% over the past 5 trading days, down 2.86% on Thursday, and down 4.94% over the past 20 trading days. The model was previously biased negative because UK inflation and borrowing surprises had pushed up global rates, compressing growth-stock valuations — i.e., future profits discounted to present value more heavily when rates are higher. But over the past 20 trading days, the 2-year U.S. Treasury yield has fallen 0.20 percentage points and the 10-year has fallen 0.15 percentage points, weakening that argument. At the same time, speculative net shorts in Nasdaq futures have covered from extreme levels. The ETF Radar model’s view on QQQ has converged from negative toward no clear single-sided direction; prices are still falling, and the model sees arguments on both sides.
Summary
On Thursday rates fell while tech stocks plunged, and the new U.S.-Israel timeline for Iran extended oil supply risk. Reminder: the above are directional forecasts for the general market from a systematic quantitative model and do not constitute personal investment advice; consult a licensed investment advisor before investing.