Global stocks experienced moderate declines on Friday as markets stabilized after a sharp tech-led selloff earlier in the week. According to The Economic Times, the S&P 500 was down 1.09%, the Nasdaq fell 2.1%, and the Dow Jones Industrial Average dropped 0.34%, though the Dow managed to post a weekly gain despite Friday's decline. The MSCI World Equity Index lost 0.40% and notched a weekly loss, while technology and communication services drove the losses. European markets showed resilience, with the STOXX 600 adding 0.72% and London's FTSE 100 rising 0.38%, both finishing the week higher. The selloff was triggered by concerns over higher interest rates and debt-fuelled financing behind the AI boom, with traders increasing bets on further US rate hikes after stronger-than-expected inflation data released on Wednesday.
Technology and communication services sectors faced renewed pressure as AI-related financing concerns intensified. According to The Economic Times, CoreWeave's shares shed 12% and lost about 25% this week amid increasing investor scrutiny of the financing for the massive AI infrastructure buildout. The PHLX chip index sank 2.5%, on track for its eighth straight day of declines, with Broadcom falling 3.6%. Portfolio manager Tom Plumb from Plumb Balanced Fund noted that "we're starting to see some cracks in the financing of data centers because you're not too sure who's going to be the winners." Adding to these concerns, some current Anthropic investors and prospective investors are weighing a lower valuation for the company in its upcoming IPO, as reported by Reuters. However, Plumb expressed optimism about future winners, stating "Our view is that there's going to be some really significant winners," while cautioning about financing capabilities as companies don't get into trouble because their assets don't exceed their liabilities, but rather when they have liquidity issues.
Oil prices jumped more than 3% due to Middle East supply worries, adding to market fears about economic stability and rising borrowing costs. As reported by The Economic Times, Brent crude futures rose 3.72% to settle at $109.86 a barrel and were headed for a second straight weekly gain amid concerns over Middle East supplies, with attacks around the Strait of Hormuz surging in the past 10 days. The oil price surge represents a significant factor weighing on market sentiment as it tends to weigh on the price/earnings multiple of stocks, according to Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. Gold gained support from the weaker dollar, rising 0.07% to $4,167.14 an ounce, while the euro rose from its recent 17-month low, up 0.16% at $1.1238.
Federal Reserve Chair Kevin Warsh voiced optimism about US economic strength and surprise about how well global economies have been "hanging in there" during a lingering energy shock and tighter monetary policy to fight inflation. According to The Economic Times, markets increasingly expect the Fed to keep interest rates unchanged this month, with Barclays now expecting 25-basis-point hikes each in December and January. The S&P 500 remains up about 12% in 2026, but most of that gain has come from AI-related tech stocks, while the index's median component has climbed only about 6%, year to date. About 185 S&P 500 stocks have lost ground in 2026, highlighting the concentration of gains in a few sectors. Third-quarter earnings season shifts into gear next week with reports from Tesla, Meta Platforms and Procter & Gamble, with analysts on average seeing quarterly earnings surging more than 30% driven by AI-related megacaps.
