Stock Market Update

[BRIEFING.COM] The stock market ended Friday's session with substantial losses as the ongoing correction in AI-related stocks intensified, sending the major averages lower for the week. The S&P 500 (-1.8%), Nasdaq Composite (-2.9%), and DJIA (-1.1%) recovered somewhat from their afternoon lows but remained firmly in negative territory, with the technology-heavy Nasdaq bearing the brunt of the selling.

The information technology sector (-4.3%) was the worst performer by a wide margin, with the PHLX Semiconductor Index plunging 7.3% and closing below its 200-day moving average. Intel (INTC 65.76, -26.31, -28.58%) suffered a particularly severe post-earnings decline after issuing disappointing Q4 guidance, citing weakening PC demand amid rising memory prices and supply constraints that are limiting its ability to meet robust data center demand. The outlook also weighed heavily on PC manufacturers HP Inc. (HPQ 28.78, -3.05, -9.58%) and Dell (DELL 424.16, -51.35, -10.80%).

Sandisk (SNDK 1151.43, -178.62, -13.43%) was another major semiconductor laggard despite reporting better-than-expected earnings, as relatively modest revenue guidance upside and caution about seasonal demand trends overshadowed exceptional data center growth. NVIDIA (NVDA 204.78, -8.88, -4.16%) also retreated sharply, adding to the pressure on the semiconductor space and reinforcing concerns about increasingly demanding expectations for AI-related companies.

The weakness extended across mega-cap growth stocks, with the Vanguard Mega Cap Growth ETF (-3.1%) reflecting the continued unwinding of the AI trade. Amazon (AMZN 240.35, -3.44, -1.41%) weighed on the consumer discretionary sector (-0.9%) following an earnings miss and negative free cash flow despite accelerating AWS growth and record operating profitability. The company's plans for even greater infrastructure spending in 2027 added to concerns about the returns on massive AI investments.

The communication services sector (-1.1%) also struggled, with Alphabet (GOOG 278.22, -4.10, -1.45%)extending its post-earnings retreat and Reddit (RDDT 91.67, -37.93, -29.27%) suffering a sharp earnings-driven decline. Meanwhile, the industrials sector (-1.6%) faced significant pressure as weakness spread to AI infrastructure-related companies.

Selling pressure intensified steadily throughout the afternoon, briefly pushing the Nasdaq Composite down nearly 4.0% and extending its retreat from its October peak near 27,700 to roughly 9.0%. The index remained decisively below its 50-day moving average near 26,570, while the semiconductor index's break below its 200-day moving average underscored the deterioration in technical momentum.

Unlike Thursday's session, when widespread strength outside mega-cap technology stocks helped offset losses in the major averages, Friday's retreat was considerably broader. The S&P 500 Equal Weighted Index (-0.8%) also finished lower, while small- and mid-cap stocks faced meaningful selling pressure, leaving defensive strength insufficient to counterbalance the losses elsewhere.

The energy sector (+1.9%) was a notable exception, benefiting from continued strength in crude oil prices. WTI crude settled just above $104 per barrel, adding just under $1.00 for the week, while Chevron (CVX 235.48, +4.02, +1.74%) provided additional support after reporting better-than-expected earnings.

Defensive buying also supported the consumer staples sector (+1.4%), with Walmart (WMT 123.51, +2.26, +1.86%), Coca-Cola (KO 94.08, +1.26, +1.36%), and Mondelez Int'l (MDLZ 64.92, +2.39, +3.82%) among the standouts. The utilities (+0.6%), health care (+0.4%), and real estate (+0.2%) sectors managed more modest gains, with strong earnings reactions in Regeneron Pharma (REGN 927.89, +109.12, +13.33%) and Eli Lilly (LLY 1417.54, +43.84, +3.19%) contributing to the resilience of health care stocks.

Treasuries attracted some safe-haven buying despite elevated crude oil prices, providing a measure of support for interest-rate-sensitive areas of the market.

The week's disappointing finish highlighted a deepening correction in the AI trade, with investors increasingly questioning the pace of infrastructure spending, the sustainability of elevated growth expectations, and the ability of companies to translate strong demand into profitable returns. While defensive sectors continued to attract interest, Friday's widespread selling demonstrated that the rotation away from technology stocks is no longer providing enough support to prevent substantial losses across the broader market.

U.S. Treasuries finished the week on a firmly higher note, turning longer tenors positive for the week while shorter tenors extended this week's gains. The 2-year note yield settled down seven basis points to 4.59% (-9 basis points this week), and the 10-year note yield settled down six basis points to 4.93% (-6 basis points this week)

• Russell 2000: +13.3% YTD
• S&P Mid Cap 400: +10.8% YTD
• S&P 500: +10.7% YTD
• Nasdaq Composite: +9.4% YTD
• DJIA: +7.7% YTD

Reviewing today's data:

• The Q3 Employment Cost Index increased 0.8% (Briefing.com consensus 0.8%) to follow a 0.9% increase in Q2, with wages and salaries rising 0.7% while benefits rose 0.9%.
  • The key takeaway is that wages and salaries for civilian workers were up 3.1% year-over-year, maintaining a trend that continues undershooting inflation. This will feed ongoing concerns about pressure on discretionary spending activity.
• Oct Chicago PMI 55.3 (Briefing.com consensus 55.9; Prior 58.8)

[BRIEFING.COM] The major averages are little changed from their previous levels heading into the final half hour of trading, with technology and semiconductor stocks showing little sign of attracting buying support despite their steep losses.

Meanwhile, Circle Internet Group (CRCL 71.80, -8.20, -10.25%) is plunging more than 10% amid a broader cryptocurrency selloff following reports of a multibillion-dollar security breach at Binance. Circle disclosed that it had frozen more than $800 million in USDC stablecoin funds linked to the exploit, raising concerns about regulatory scrutiny and operational risks. Bitcoin has fallen back below $77,000, while other cryptocurrency-related stocks, including Bitdeer Technologies (BTDR 6.60, -0.98, -12.86%), American Bitcoin Corp. (ABTC 6.60, -0.90, -12.06%), and BitGo Holdings (BTGO 5.27, -0.52, -8.98%), are also suffering double-digit percentage losses.

[BRIEFING.COM] The major averages continue to steadily chart session lows with roughly an hour remaining in today's session. The S&P 500 (-2.5%), Nasdaq Composite (-3.8%), and DJIA (-1.5%) are facing increasingly pronounced losses, with the tech-heavy Nasdaq extending its sharp October reversal.

The Nasdaq has now retreated roughly 9% from its October peak near 27,700, falling decisively below its 50-day moving average near 26,570 and undercutting its late-October lows. The deterioration in technical momentum reflects continued selling pressure across growth stocks amid disappointing earnings reactions and mounting concerns about AI infrastructure spending. The PHLX Semiconductor Index (-9.0%) is leading the retreat, having fallen below its 200-day moving average and remaining on pace for another week of losses (-2.3% WTD). The pronounced weakness in semiconductors is adding to the broader deterioration in technology stocks, while the Nasdaq's psychologically important 25,000 level is emerging as the next area to watch, followed by its late-July low near 24,400.

[BRIEFING.COM] The S&P 500 (-2.4%) has continued its retreat to fresh session lows, revisiting levels last seen in mid-September, though a close at the current mark would represent the lowest settlement since early August.

The steady retreat has masked solid gains in five sectors, including countercyclical consumer staples (+1.8%), utilities (+1.0%), and health care (+0.7%). These three groups have seen steady strength in October, showing month-to-date gains of 11.8%, 10.5%, and 10.0%. Of the three, the utilities sector has been rallying the longest, marking its inflection point a couple days before the turn of the calendar, which brings its gain off its late-September low to 11.7%.

Today's rally in utilities has been paced by Alliant Energy (LNT 72.07, +1.93, +2.74%) even though the stock went ex-dividend. Today's gain has returned LNT to levels from late July while Consolidated Edison (ED 117.12, +1.64, +1.42%) has climbed to a fresh record high.

[BRIEFING.COM] The S&P 500 (-2.1%) has faced continued pressure, which has had the index slipping to fresh session lows through the day while the Nasdaq (-3.3%) has followed the same path. As a result, the two indices are now down a respective 1.2% and 5.8% for the month.

In addition to losses in the technology sector (-4.9%), the market has had to contend with a relentless grind higher in the price of oil, which is up $2.63, or 2.6%, at $104.63/bbl today. This has offered continued support to the energy sector (+1.4%), which has extended its October gain to 13.3% with help from fresh record highs being set in heavyweights Exxon Mobil (XOM 186.40, +3.11, +1.70%) and Chevron (CVX 234.97, +3.51, +1.52%) today.

A rising price of oil has been synonymous with rising Treasury yields in recent months, but today that influence is meeting a counter from a bit of a flight to safety given the volatility in AI-related stocks. This has helped the 10-yr note defend the bulk of today's starting gain with its yield down six basis points at 4.93%, tracking its lowest settlement since the second week of September.