The stock market finished a volatile week with mixed results, as sharp swings in technology and AI-related stocks contrasted with a stronger showing across much of the broader market. The S&P 500 declined 0.5% and the Nasdaq Composite fell 0.7%, while the DJIA gained 0.4%. The Russell 2000 outperformed with a 2.0% advance, while the S&P Mid Cap 400 finished unchanged.
Third-quarter earnings were a central influence on the week's trading, particularly as investors reassessed the costs and growth prospects of the AI infrastructure buildout. An early rebound in semiconductor stocks struggled to maintain momentum before encouraging earnings developments briefly restored technology leadership Wednesday. That optimism faded sharply Thursday as renewed concerns about capital expenditures, financing requirements, and profitability sparked another selloff across AI-related stocks.
Meta Platforms was a notable source of pressure following its earnings report. Despite better-than-expected revenue and underlying earnings, the company faced substantial selling as investors focused on elevated AI spending, negative free cash flow, and contracting operating margins. The reaction reinforced concerns about the returns on increasingly expensive AI investments.
The information technology sector declined 0.3%, with software stocks a notable exception. The communication services sector (-6.2%) suffered the largest weekly decline, pressured by weakness in Meta and traditional wireless providers, while the industrials sector (-1.9%) also struggled amid selling in AI-related power infrastructure stocks.
Despite the technology-related weakness, market participation was considerably healthier than the major averages suggested. The S&P 500 Equal Weighted Index gained 1.1%, outperforming the cap-weighted index. Seven of the 11 S&P 500 sectors finished higher, led by the energy (+1.6%) and health care (+1.5%) sectors. The real estate (+0.9%), utilities (+0.8%), and financials (+0.7%) sectors also advanced, reflecting continued buying interest outside the market's largest growth stocks.