The stock market finished a volatile week with sizable losses, as a deepening selloff in semiconductor and AI infrastructure stocks overshadowed strength in several other areas. The S&P 500 declined 2.7%, the Nasdaq Composite fell 3.4%, and the DJIA lost 0.9%. The Russell 2000 dropped 2.1%, while the S&P Mid Cap 400 declined 1.6%.
The week's trading was heavily influenced by Tuesday's midterm elections, which gave Democrats control of both chambers of Congress, and a sharp decline in crude oil prices amid improving prospects for a diplomatic resolution to the conflict with Iran. Those developments fueled a broad rally Wednesday, with consumer-facing stocks benefiting from expectations for lower energy costs and potential bipartisan efforts to address affordability. However, the rebound proved short-lived as mounting concerns about restrictions on data center development intensified the ongoing correction in AI-related stocks.
The selling reached its peak Thursday, when the Nasdaq Composite plunged 5.5% and entered correction territory, while the S&P 500 fell 4.4%. The information technology sector suffered a 7.3% decline that session. Although semiconductor stocks rebounded modestly Friday, the group finished the week down 12.2%, reflecting continued concerns about the pace of AI infrastructure expansion and the elevated valuations of companies tied to that investment cycle.
The information technology sector (-6.9%) was the largest drag on the major averages outside the energy sector. Select mega-cap names demonstrated relative strength, including Amazon, which gained 7.8% for the week. The industrials sector (-2.8%) also struggled as selling pressure extended to companies involved in data center construction and power infrastructure.
Crude oil prices fell approximately 13% for the week, with WTI retreating sharply on indications that the U.S. could pursue a diplomatic resolution with Iran rather than additional military action. The decline weighed heavily on the energy sector (-11.9%), but provided some relief to consumer-facing and interest-rate-sensitive stocks. The consumer discretionary (+2.7%), communication services (+2.3%), and real estate (+1.9%) sectors were among the strongest performers.
Despite those pockets of strength, the broader market was unable to escape the technology-led retreat. The S&P 500 Equal Weighted Index declined 1.1%, outperforming its cap-weighted counterpart but still finishing firmly lower. Thursday's widespread selling demonstrated how concerns surrounding AI infrastructure investment had spread beyond semiconductor stocks, while the CBOE Volatility Index surged 32% for the week to 25.64.
Treasuries attracted safe-haven demand as equity markets struggled, with the 10-year note yield declining seven basis points to 4.86%. However, Friday's stronger-than-expected October employment report reinforced expectations for additional Fed tightening. Nonfarm payrolls increased by 165,000, while the unemployment rate fell to 4.1%, helping lift the probability of a 25-basis-point rate hike at the December FOMC meeting to nearly 80%, according to the CME FedWatch tool.
Overall, the week's losses highlighted the market's increasing sensitivity to developments affecting the AI investment cycle. Although lower oil prices and expectations for policy changes supported several sectors, the sharp decline in semiconductors and related infrastructure stocks overwhelmed those gains, leaving the major averages firmly lower and volatility elevated heading into the following week.
DJIA: -0.9% week-to-date
S&P Mid Cap 400: -1.6% week-to-date
Russell 2000: -2.1% week-to-date
S&P 500: -2.7% week-to-date
Nasdaq Composite: -3.4% week-to-date