Fears of a “Black Monday” crash are intensifying as Monday, October 19 approaches, as Wall Street reels from an AI-driven sell-off, rising oil prices and renewed inflation concerns.
The latest disruptions have increased concerns about a broader stock market crash in 2026. On Friday, the Nasdaq Composite fell 2.19%, the S&P 500 fell 1.22% and the Dow Jones Industrial Average fell 0.55%, according to Reuters.
The selloff left the Nasdaq down more than 4% for the week, while the S&P 500 posted its worst weekly performance since January. The Cboe Volatility Index (VIX), Wall Street’s main fear gauge, jumped nearly 25% to 20.57, its highest level since late July.
The latest wave of selling reflects growing concerns about the sustainability of AI investments, rising energy costs and the possibility that borrowing costs will remain high.
AI-related stocks are under particular pressure as investors question whether companies investing heavily in data centers can generate enough revenue to justify their spending.
CoreWeave (NASDAQ: CRWV) plunged 12% on Friday, extending its five-session losses to around 25%. The company’s bonds also sold off heavily, pushing yields above 15%. Broadcom (NASDAQ: AVGO) fell 3.6%, while the Philadelphia Semiconductor Index posted another decline, extending its losing streak to eight sessions.
Why the stock market plunged on Friday
This weakness has raised concerns about the ability of highly leveraged AI infrastructure companies to generate sufficient returns to repay their debt, with further financial stress likely to spill over into credit markets and the broader economy.
Meanwhile, Brent crude soared to around $109 a barrel amid tensions in the Middle East and fears of supply disruptions, raising inflation risks and potentially limiting the Federal Reserve’s ability to cut interest rates. Stronger-than-expected U.S. producer price data added to concerns about borrowing costs and pressure on growth stock valuations.
Investor leverage poses another risk, as U.S. margin debt reached around $1.5 trillion before falling to $1.4 trillion in August, up 27% year-over-year. A prolonged selloff could trigger margin calls, forcing investors to liquidate their holdings and magnifying losses, although high leverage alone does not mean an imminent crash.
Prediction markets remain unfazed
Despite growing concerns, Polymarket assigned a 7% probability of an AI bubble bursting by December 31, 2026, rising to 16% by June 30, 2027. The respective contracts recorded approximately $2.44 million and $26,906 in trading volume.
The market requires at least three specified events within 90 days to qualify, including a 50% decline in Nvidia (NASDAQ: NVDA) from its all-time high, a 40% decline in the iShares Semiconductor ETF from its peak, or certain major AI company failures.
These probabilities reflect the likelihood of meeting specific criteria, not the likelihood of a broader stock market crash or other Black Monday-style collapse.
Meanwhile, Polymarket’s S&P 500 opening contract from October 19 showed a 44% probability of opening higher, implying a 56% probability of opening lower. The contract reflects the expected direction at the open, not the potential size of a decline, and its probabilities can change as trading continues.
Fears have intensified as October 19 marks the anniversary of the Black Monday crash of 1987, when the Dow Jones Industrial Average plunged 22.6% in a single session.
The date falls on a Monday again in 2026, fueling the comparisons, although the coincidence does not signal a repeat.
Featured image via Shutterstock
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