U.S. equity markets opened the week with three consecutive winning sessions before sharp selling derailed late-week momentum. Will corporate balance sheets and broader market participation stabilize equity valuations or are investors beginning to look more under the hood?
Monday S&P 500 0.41% | NASDAQ 1.11%
Equities kicked off the week on a positive note as dip-buyers stepped into large-cap technology leaders following the prior Friday’s pullback. The U.S. dollar strengthened as Treasury yields rose on the day. A slew of regional bank earnings were announced but were overshadowed by the risk-on trade.
Tuesday S&P 500 0.28% | NASDAQ 0.02%
Benchmark averages diverged on Tuesday as solid quarterly results from industrial and healthcare leaders lifted the broader S&P500. Meanwhile, the Nasdaq Composite finished essentially unchanged as investors took profits in select chipmakers. On the macroeconomic front, housing starts and pending home sales declined in the month of September1 .
Wednesday S&P 500 0.58% | NASDAQ 1.05%
Markets staged their strongest advance of the week on Wednesday. Technology and communication services led the advance as software and cloud infrastructure providers saw strong demand. Broader markets also rose as consumer and financial companies outperformed.
Thursday S&P 500 1.21% | NASDAQ 2.60%
Heavy selling pressure swept through technology equities on Thursday due to investor concerns over AI spending and corporate debt loads. The Nasdaq suffered its steepest one-day decline since June. A flight to safety pulled the 10-year Treasury yield down to 4.96%2 .
Friday S&P 500 0.52% | NASDAQ 0.21%
Markets closed out the week on a subdued note as ongoing friction overseas pushed crude oil prices higher. Defensive healthcare and dividend-paying utilities exhibited relative strength. However, the late-week tech pullback dragged both major benchmark indices to net weekly losses.
Conclusion S&P 500 0.47%3 | NASDAQ 0.71%4
The past week demonstrated how rapid shifts in market narratives can introduce near-term volatility. Tech leaders benefited from AI demand and then struggled as investors questioned if the spending and debt needed to fund the AI buildout is sustainable. Value and cyclical sectors demonstrated resilience as investors sifted through the data. Energy costs remain elevated and the risk-off trade was evident in flows across non-AI sectors and asset classes. Markets are taking a closer look at the fundamentals of growth of companies sending big names lower. The volatility index reflected this trend last week5 as the AI build out continues but under an increased level of scrutiny. Corporate earnings season could reveal what is under the surface as GDP projections continue to remain strong6.
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