The major averages finished higher for the week, supported by a broadening of market leadership that helped offset a sharp retreat in semiconductor and other AI-related stocks. The S&P 500 gained 1.2%, the DJIA advanced 0.9%, and the Nasdaq Composite rose 0.6%. Smaller companies lagged, however, with the Russell 2000 falling 0.9%, while the S&P Mid Cap 400 finished unchanged.
The week began on a strong note, with technology and mega-cap growth stocks helping drive the major averages higher before participation broadened considerably. The Nasdaq Composite reached fresh record highs on Monday and Tuesday, while the S&P 500 established its first record high since August 13 on Tuesday and closed above 7,800 for the first time. Gains across ten of the eleven S&P 500 sectors during both sessions represented a meaningful departure from the narrow leadership that had characterized much of the market's recent action.
That improvement in participation ultimately became one of the week's defining features. The S&P 500 Equal Weighted Index gained 1.6%, outperforming the cap-weighted S&P 500. Nine of the eleven S&P 500 sectors finished higher, with several defensive and economically sensitive areas providing the strongest support. The consumer staples (+4.0%) and utilities (+3.9%) sectors led the standings, while the energy (+3.6%), consumer discretionary (+3.1%), health care (+2.8%), and financials (+2.3%) sectors also posted sizable gains.
The broad strength contrasted sharply with weakness across semiconductor and other AI-related stocks, particularly during the second half of the week. Questions surrounding the revenue growth supporting the AI infrastructure buildout intensified Thursday following a Financial Times report concerning OpenAI's annualized revenue, prompting a pronounced retreat across chipmakers and related names. The information technology sector slipped 0.3%.
Treasury yields remained elevated but provided some relief as the week progressed. The 10-year note yield briefly climbed to 5.36% on Wednesday, reaching a fresh high for the year before strong demand at Treasury auctions and a subsequent retreat in crude oil helped reverse some of the pressure. The 10-year yield ultimately finished four basis points lower for the week at 5.24%, while the 2-year yield declined three basis points to 4.79%. The pullback offered some support for rate-sensitive areas, although the Russell 2000's weekly decline demonstrated that smaller companies continued to face headwinds.