The people who lend money to AI are now charging as if they think one of its biggest names can't pay them back.

AI stocks bounced Monday morning. But the people who lend money to the AI build-out are charging as if they expect one of its biggest names could struggle to pay them back. Last week the S&P 500 fell nearly 2% and the Nasdaq dropped 4.5%, the steepest weekly decline since late June and the first break in the Nasdaq's four-week winning streak.

Monday brought a rebound, with futures rising and the 10-year yield slipping, yet the credit market tells a different story. For the retiree holding index funds, the warning light is not in the stock quotes they watch but in the bond spreads they never see.

Where the Market Stands This Morning

Monday's premarket showed Nvidia rising 1.1%, with CoreWeave and Broadcom shares also moving higher.

The S&P 500 had fallen 1.22% on Friday, and the Dow Jones Industrial Average was down 0.55% at 51,891.77. The Nasdaq Composite was down 4.5% for the week.

The Earnings Test That Starts This Week

Meta Platforms is expected to report earnings this week, with analysts expecting it to beat Wall Street estimates. Tesla is also set to report earnings, and Netflix is expected to release its financial results this week as well.

The week ahead is an earnings test for the market. These reports will provide insight into the performance of these companies and could impact the broader market.

The Credit Market Is Pricing Distress Risk on CoreWeave

CoreWeave is a data-center operator that has borrowed heavily to build facilities it rents to tech firms. Shares of CoreWeave fell about 25% last week, and credit default swaps, which are the cost to insure its debt against default, have hit distress levels.

Goldman Sachs traders have noted that AI credit spreads and hyperscalers are at the widest levels of the year. Anthropic, a major AI firm, reported Q3 revenue of $16.8 billion, up from $11.6 billion in Q2, but questions remain about the pace of its build-out. The credit market is pricing heavy risk that CoreWeave, a major player in the AI build-out, could struggle to pay its debts.

Oil Eased After Russia Sanctions Were Waived

Brent crude futures fell 1.8% to around $107 a barrel after the U.S. waived some sanctions on Russia.

The 10-year Treasury yield fell to 5.085% Monday. Oil prices rose last week, which pressured stock valuations.

European Stocks Opened Lower Monday

European stocks opened lower Monday, with France's CAC 40 down 1.18%, Italy's FTSE MIB down 0.76%, Germany's DAX down 0.70%, and the UK FTSE 100 down 0.46%. Investors have adopted defensive positioning as market breadth deteriorated and they reassessed risks across technology-related assets.

Goldman Sachs traders highlighted increasing pressure in credit markets, particularly among major technology companies investing heavily in AI infrastructure. With the uncertainty surrounding the AI build-out, credit markets remain under pressure, and investors are confronting what happens as AI spending growth slows.

What to Watch Today

The week ahead is an earnings test for the market, with Meta Platforms, Tesla, and Netflix all set to report this week. The credit market is still pricing heavy risk on the most debt-heavy AI company, and the 10-year Treasury yield fell to 5.085% Monday. The stock screen says rebound, the bond market says caution, and this week's earnings decide which one the index you own follows.