The stock market struggled during the week as renewed inflation concerns, rising oil prices, and growing skepticism about the financing of artificial intelligence infrastructure weighed on investor sentiment. The Nasdaq Composite led the retreat, reflecting pronounced weakness in semiconductor and other growth-oriented stocks, while the Dow Jones Industrial Average held up relatively well thanks to strength in defensive and economically sensitive sectors.
The biggest headwind was a reassessment of the AI investment cycle. Concerns about CoreWeave's debt obligations and the financial sustainability of aggressive data center expansion contributed to selling across semiconductor and AI infrastructure stocks. Micron, Advanced Micro Devices, and other chipmakers faced substantial pressure. Apple was a notable exception, benefiting from encouraging reports about initial iPhone Duo demand.
Inflation provided another source of anxiety. September CPI and PPI reports showed accelerating price pressures, raising concerns about additional Federal Reserve tightening. Meanwhile, escalating geopolitical tensions in the Middle East drove WTI crude oil prices above $100 per barrel, adding to inflation worries. Interestingly, Treasury yields declined despite those developments, with the 10-year yield falling 14 basis points to 5.10%. That decline, however, provided little lasting relief for growth stocks.
There were pockets of strength, particularly in energy, health care, consumer staples, and financial stocks. Better-than-expected retail sales and resilient labor market data also suggested that the economy continued to expand despite persistent inflation. Nevertheless, Thursday's broad-based rebound proved short-lived, with renewed selling on Friday leaving the market on a defensive footing.
DJIA: +0.7% week-to-date
S&P Mid Cap 400: -1.5% week-to-date
S&P 500: -1.9% week-to-date
Russell 2000: -3.0% week-to-date
Nasdaq Composite: -4.5% week-to-date