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Last Week’s Stock Market Recap: Tech Turbulence and Economic Signals
The past week in the stock market was a mixed bag, defined by a calm start, Thursday’s sudden volatility, and ending with a modest recovery. Key themes emerged around the growth potential of tech stocks, the resilience of the U.S. economy, and persistent inflation pressures. Here’s a breakdown of what happened and why it matters:
Monday-Wednesday: A Calm Start, but Concerns Loom Large
The early part of the week was relatively quiet, with little major news moving the markets. Investors, however, began to express growing concerns about the growth potential of technology stocks, particularly in the artificial intelligence (AI) sector. This anxiety reflected a broader sentiment that high interest rates and inflation could limit tech’s performance, making investors wary of how sustainable AI’s boom really is.
Thursday: Volatility Hits
By Thursday, the quiet came to an end as stocks stumbled. With concerns around inflation, interest rates, and tech stock growth, the market faced its most volatile day of the week. Although the S&P 500 and Nasdaq rallied on Friday, they couldn’t make up for lost ground, ending the week with declines of over 1%.
U.S. Economy Holds Steady
Despite market jitters, the U.S. economy largely held its momentum through the third quarter. The latest GDP growth figure of 2.8% fell slightly short of the second quarter’s 3% growth but showed that the economy remains resilient against high interest rates and inflation. Yet, cracks started to show in the labor market. October’s job growth was limited to just 12,000 positions, the smallest increase since December 2020. Revisions also lowered August and September job figures, hinting at a potential softening of labor demand.
Major Indexes See October Setbacks
October was tough for all three major indexes. The S&P 500 slipped 1.0%, snapping a five-month winning streak, while the Nasdaq and Dow fell 0.5% and 1.3%, respectively. This was only the second monthly loss for the S&P in a year—a reminder that sustained growth is no easy feat in today’s uncertain climate.
Earnings Season Highlights
One bright spot was earnings season, as technology giants reported stronger-than-expected results. Analysts now expect third-quarter earnings for S&P 500 companies to rise by an average of 5.1%, fueled by impressive growth in several big tech players.
Rising Yields and Inflation Data
Yields on U.S. government bonds continued to rise, with the 10-year Treasury note’s yield closing at 4.37% on Friday. Although the rate of increase was slower than in recent weeks, the trend still signals caution among investors. Meanwhile, inflation showed signs of easing; the Fed’s preferred inflation measure, the Personal Consumption Expenditures Index, rose 2.1% in September, down from 2.3% in August—the lowest level since February 2021.
What’s Ahead
Looking forward, this week holds a packed agenda, including a pivotal U.S. Federal Reserve meeting, expected to conclude on Thursday. Economists widely anticipate a quarter-point interest-rate cut, following the half-point cut in September. And with U.S. elections on Tuesday, more volatility could be on the horizon.
As we wrap up October, investors are left navigating a delicate balance between positive earnings momentum and macroeconomic headwinds. The tech sector and broader economic indicators will be crucial in shaping the market’s direction heading into the year’s final months.
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