Stock markets in Canada and the U.S. slide on AI fears, higher oil prices

TORONTO – Canada’s main stock index finished the week in negative territory as North American markets felt pressure from higher oil prices and concerns about the AI trade.

“The main setbacks for the markets, TSX and North America in general, came really in two forms,” said Allan Small, senior investment adviser at iA Private Wealth.

“One is this idea of a technology pullback … and this idea that perhaps companies are spending too much on AI and not getting the return on their investment for the capital that they are putting out, and that is a big fear.”

The S&P/TSX composite index was down 185.27 points at 35,788.18.

In New York, the Dow Jones industrial average was down 652.82 points at 52,215.16. The S&P 500 index was down 39.75 points at 7,623.68, while the Nasdaq composite was down 53.52 points at 25,955.34.

Small said another risk facing the tech sector is that “AI can’t just go to the moon forever.”

“At some point, memory chips, the production of them would have to slow because the market would have enough memory chips.”

But falling AI stock prices could also mark a buying opportunity for some investors.

“There are a lot of names that are a lot cheaper than they were just a little while ago, although I will say that for tech, the highs were probably back at the beginning of the summer,” Small said.

He said the second major issue that markets grappled with this week was higher energy prices from the war in the Middle East and fears of potential escalation.

“We’re seeing oil prices move higher on this idea … that after the U.S. midterms, the war could ramp up once again. We have not seen really any missiles flying for a while now, but President Trump made some comments recently which has led people to believe that there could be renewed hostilities in the Middle East,” he said.

The December crude oil contract was up US$3.80 at US$103.27 per barrel.

Higher energy prices are also playing a crucial role in investor expectations that the Bank of Canada will hike its key lending rate next week. Financial market odds for a hike next Wednesday stood at nearly 78 per cent as of Friday afternoon, according to LSEG Data & Analytics.

“My view on that is I think it would be foolish for the Bank of Canada to hike interest rates. I think it would be foolish for the Bank of Canada to focus on inflation when we have an economy that is really not doing a heck of a lot,” Small said, adding that growth has been muted.

The U.S. Federal Reserve is also scheduled to make an interest rate announcement on Wednesday.

“The odds of a hike in the U.S. are down quite substantially … so it doesn’t look like they’re going to go. The odds are now that if they move, they’ll move in December,” Small said.

The Canadian dollar traded for 71.46 cents US compared with 71.32 cents US on Thursday.

The December gold contract was down US$52.50 at US$4,007.90 an ounce.

This report by The Canadian Press was first published Oct. 23, 2026.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)