Major U.S. indexes opened the session mixed on Friday, with the S&P 500 edging higher even as a broad slump in technology and AI-linked shares kept the benchmark on track for a weekly loss.
The Dow Jones Industrial Average rose 0.37%, while the S&P 500 added 0.09% and the Nasdaq Composite slipped 0.21%.
Among the so-called "Magnificent Seven," Apple gained 1.13%, Tesla climbed 0.86%, Microsoft added 0.49%, Meta Platforms advanced 0.13% and Amazon rose 0.08%, while Alphabet fell 0.05% and Nvidia dropped 0.64%.
The chip sector weakened once again, with the VanEck Semiconductor ETF (SMH) down 0.7% as Micron, AMD and SanDisk led the declines. Pressured by negative news tied to memory chips, semiconductors have struggled all week, and before Friday's open the SMH had already fallen 7.4% over the period.
The semiconductor pullback, combined with weakness in other AI-related names, means the S&P 500 is likely to post a weekly decline. The benchmark is down 0.9% for the week, while the Nasdaq has lost 2.4%.
Jeff Richards, a managing partner at Notable Capital, said: "Over the past 6 to 12 months, one of the real challenges in tech and AI is that a huge amount of innovation is happening in the private markets." He noted that AI companies such as Anthropic and OpenAI could ease many investor concerns if they complete listings. "By 2027, as more information becomes available — analyst coverage and detailed data on core operating metrics — I think a lot of the market's panic will ease," he said.
Beyond the technology sector, investors are still digesting stronger-than-expected inflation data, with the U.S.-Iran conflict pushing energy prices higher and adding to inflation pressure. This week's U.S. producer price index came in above expectations, while consumer inflation remains above the 2% target.
Federal Reserve Chair Kevin Warsh spoke overnight at an International Monetary Fund event in Bangkok. Although he did not signal whether the Fed will raise rates before year-end, the trading market interpreted his remarks as pointing to unchanged monetary policy later this month. CME Group's FedWatch tool shows markets pricing an 85% probability that the October 27-28 meeting will leave the overnight rate unchanged.
The market is holding to expectations that the Fed will stand pat in October. Warsh did not dispel expectations that the central bank will keep rates steady at its month-end meeting. On Friday he reiterated that the Fed will achieve price stability and described September's rate increase as removing "some of the accommodation."
On the October policy meeting, he made clear he would not prejudge the path of the Fed's monetary assets or pre-announce possible actions at the remaining meetings this year, stressing that each decision will be formed by weighing output, employment and inflation rather than a preset policy path, and reiterating his preference that the Fed offer no forward guidance at all.
At the same time, Warsh described AI in his remarks as the most far-reaching economic transformation of his lifetime, while emphasizing that AI's shock to the demand side will arrive before any improvement on the supply side. His comments reinforced the view that frontier AI technology will change the economy over the long term, but offered no commitment to a pause in October.
For global semiconductor stocks, which have suffered sharp selling and entered correction territory in recent days, the positive takeaway is that he did not further strengthen near-term rate-hike expectations. Whether Treasury yields can continue to cool, and whether the recently battered AI compute theme and the broader semiconductor and technology-related sectors can launch a counterattack, still depends on whether inflation, corporate financing conditions and AI profit realization can improve at the same time.
The aftershocks of August's "Treasury twist" have yet to fade, and the November refunding announcement could be the next flashpoint. As the Treasury prepares to update its debt management plan in November, key clues may emerge on Friday.
Traders are closely watching the quarterly financing survey the U.S. Treasury sends to primary dealers on Friday, trying to gauge whether Bessent is preparing to reduce long-term Treasury supply or further expand buybacks in a new round of financing plans to be announced in November. The market's sensitivity stems from an unexpected Treasury move in August, when Bessent suddenly expanded old-bond buybacks, raising repurchase volumes for 10- to 30-year Treasuries beyond the normal quarterly financing schedule. The move was dubbed a "Treasury twist" by the market and widely read as an attempt to ease pressure from rising long-term yields.
HSBC: bond-market storm cannot stop stocks from pushing higher. HSBC's global investment research team said plainly in its latest view that investors should not "fight the AI trade." The bank believes AI earnings momentum is strong, the monetization path is clearer, and valuations after adjustment are no longer expensive, leaving an overall risk-reward profile that remains attractive.
HSBC strategists pointed out that AI remains one of the hardest trends in the market to bet against. Monetization signals continue to be positive. At the same time, accelerating AI inference demand is strengthening cloud revenue at major hyperscalers, and GPU rental prices remain firm. This means the AI supply chain is shifting from a "capex story" to a "revenue realization story," easing market concerns about returns on compute investment.
The recent bond selloff has pushed yields higher, which typically pressures high-valuation growth stocks. Yet equity performance shows that earnings support for the AI theme is offsetting the impact of rising rates. HSBC believes that as long as AI monetization keeps being validated, corporate IT spending keeps tilting toward AI, and cloud and compute demand stay strong, AI-driven stock gains still have further potential.
Is a hidden bear market in U.S. stocks concealing a big opportunity? Goldman Sachs predicts a "three-pronged buying wave" is gathering force to return. A report just released by well-known Wall Street research firm The Kobeissi Letter shows that U.S. benchmark indexes remain near highs, but valuations have already "gone into winter." In the firm's view, energy inflation along with Treasury yields and rate-hike expectations have depressed the valuations the market is willing to pay; if those pressures ease and earnings continue to be realized, tech stocks led by the "Magnificent Seven" could see a powerful valuation recovery.
Goldman Sachs' flows team offers another bullish clue: the reopening of corporate buyback windows, year-end retail inflows and post-election foreign buying could bring incremental demand for stocks that have suffered valuation compression. Together, the two point to the same conclusion: high-quality technology growth assets that can keep delivering strong earnings are poised to benefit from both returning capital and valuation repair.
Is a "mega bull market" brewing inside the S&P 500? A hedge fund heavyweight is betting on "the other 493 stocks." AI concept stocks have been under pressure recently, but hedge fund veteran Thomas Hayes believes investors may be overlooking another shift taking place in U.S. equities: while the S&P 500 is still dominated by a handful of large technology names, a broader market within the index is brewing a powerful rally.
Hayes, founder and managing member of Great Hill Capital, expects that over the next six months, the "other 493 stocks" in the S&P 500 — everything outside a small group of large technology companies — could become the main driver of market gains. His judgment rests on a change in the AI investment logic: in the past, investors rushed to buy companies supplying chips and compute for AI infrastructure; but as competition intensifies and supply rises, those companies' high margins may be hard to sustain. By contrast, businesses that can use AI to lift productivity and expand margins may be the more worthwhile investment focus for the next phase.
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