Wall Street’s early-week recovery came apart as investors questioned what all the heavy AI spending will actually return. Big tech dragged the main benchmarks lower, but the damage was uneven: small caps finished the week ahead and defensive sectors drew buyers.
The economy gave little comfort to anyone hoping for easier money. Growth strengthened, inflation stayed high and the Federal Reserve held rates steady even with two officials voting for a hike. By Friday the market wanted more than growth to feel reassured.
In Simple Words
The biggest stocks struggled, but that doesn’t mean the whole market fell. Money moved into other kinds of businesses while investors rethought how much to pay for future AI growth.
Early Gains Vanish by Friday
Stocks climbed through Wednesday on renewed buying in AI-linked companies. Thursday showed how much the market leans on its largest names: the main indices slipped even as many individual stocks rose. Friday brought broad selling that wiped out the large-cap indices’ gains for the week.
Also Read: US Weekly Earnings Review: Microsoft, Alphabet, Amazon, Intel and Major Q3 Results (Oct 26–30, 2026)
| Session | S&P 500 | Nasdaq Composite | Dow | Russell 2000 |
|---|---|---|---|---|
| Mon, Oct 26 | 7,676.77 | 26,169.38 | 52,361.58 | 2,786.42 |
| Tue, Oct 27 | 7,722.60 | 26,477.81 | 52,377.57 | 2,818.87 |
| Wed, Oct 28 | 7,743.98 | 26,549.85 | 52,475.10 | 2,830.51 |
| Thu, Oct 29 | 7,720.39 | 26,184.72 | 52,342.56 | 2,859.22 |
| Fri, Oct 30 | 7,580.07 | 25,437.00 | 51,770.31 | 2,811.84 |
| Index | Mon | Tue | Wed | Thu | Fri | Week |
|---|---|---|---|---|---|---|
| S&P 500 | +0.70% | +0.60% | +0.28% | −0.30% | −1.82% | −0.57% |
| Nasdaq | +0.82% | +1.18% | +0.27% | −1.38% | −2.86% | −2.00% |
| Dow | +0.28% | +0.03% | +0.19% | −0.25% | −1.09% | −0.85% |
| Russell 2000 | +0.38% | +1.16% | +0.41% | +1.01% | −1.66% | +1.29% |
Weekly changes compare Friday’s close with the previous Friday. Small caps gave back part of their advance on Friday but still finished the week higher, unlike the large-cap benchmarks.
Defensive Sectors Beat the Tech Leaders
Healthcare and utilities topped the sector rankings, while communication services and technology were the weakest. That contrast says more than the headline decline: investors were shifting money around inside equities instead of treating every business the same.
It also exposed concentration risk. When heavily weighted tech and communication names fall together, the main indices can look much weaker than the market underneath.
| Sector | Weekly change |
|---|---|
| Healthcare | +3.06% |
| Utilities | +2.00% |
| Technology | −1.80% |
| Communication services | −5.47% |
The Fed Holds, but a Hike Is Still on the Table
The Fed kept its policy range unchanged, calling economic activity strong and inflation elevated. Lisa Cook and Beth Hammack dissented in favour of a rate increase, a clear sign the pause was not a verdict that inflation has been beaten.
A steady rate gave markets breathing room, but the statement kept a hard outlook for companies and households sensitive to borrowing costs.
| Policy decision | Outcome |
|---|---|
| Federal funds target range | 3.75%–4.00% |
| Committee vote | 10–2 |
| Increase preferred by dissenters | 0.25 percentage point |
Strong Growth Meets Stubborn Prices
The GDP report showed faster growth driven by investment, consumer spending and government outlays. The monthly spending data told a less comfortable story: household spending rose in dollar terms, while inflation-adjusted consumption barely moved.
That mix explains the unease. Demand is strong enough to keep business humming, but inflation keeps eating into purchasing power and weakens the case for lower rates.
| Economic release | Latest reading |
|---|---|
| Q3 real GDP growth, annualized | 3.4% |
| Previous-quarter GDP growth, annualized | 2.2% |
| September PCE inflation, annual | 3.6% |
| September core PCE inflation, annual | 3.1% |
| September nominal consumer spending, monthly | +0.5% |
| September real consumer spending, monthly | Less than +0.1% |
The labour market sent mixed signals. Low jobless claims point to limited layoffs, while the September payroll report showed weak hiring, and employment costs kept rising though at a slower quarterly pace.
Also Read: Top Global News Today, November 1, 2026: South Korea’s Export Surge, OPEC+ Talks and US Midterms
| Labour measure | Reading | Reference period |
|---|---|---|
| Initial unemployment claims | 194,000 | Week ended Oct 24 |
| Payroll increase | 29,000 | September |
| Unemployment rate | 4.2% | September |
| Employment-cost growth | 0.8% quarterly | Q3 |
Treasuries Catch a Bid as Stocks Slide
Government bonds reacted differently. Yields finished lower, meaning stronger demand for Treasuries even with inflation still a policy worry. The dollar barely changed over the week.
Together, these moves suggest investors were weighing inflation risk against rising concern about market stress and how long tech valuations can hold.
| Market | Previous Friday | Latest Friday |
|---|---|---|
| Two-year Treasury yield | 4.69% | 4.56% |
| Ten-year Treasury yield | 5.00% | 4.94% |
| Dollar index | 101.81 | 101.88 |
Oil Climbs While Gold and Bitcoin Struggle
Oil finished higher as shipping risks and fears of escalation in the Iran conflict kept supply security in focus. Gold offered no shelter during Friday’s equity sell-off, and Bitcoin weakened over the week, with the Binance security breach adding a separate shock to falling risk appetite.
| Asset | End-of-week reference | Weekly direction |
|---|---|---|
| WTI crude, December futures | $104.12 a barrel | Higher |
| Brent crude, December expiry | $117.64 a barrel | Higher |
| Brent crude, January futures | $113.43 a barrel | Settlement for the later contract |
| Gold, December futures | $3,898.90 an ounce | Lower |
| Bitcoin | About $77,000 | Down roughly 5% |
Deals Continue, but Funding and Approvals Matter
DoorDash’s agreement to buy Instacart was the biggest consumer-platform deal of the week. It combines delivery infrastructure with grocery technology and advertising, but still needs shareholder and regulatory approval.
The IPO market served up a warning on execution risk: OPay pulled its planned US offering after disclosing a foreign regulatory inquiry. AI investment returns became a central market worry, and the White House’s robotics-import proclamation ordered negotiations without imposing immediate tariffs.
| Development | Key announced figure or status |
|---|---|
| DoorDash–Instacart agreement | About $17 billion equity value |
| Consideration per Instacart share | $65 |
| OPay offering withdrawn | Planned $304 million |
| Robotics-import policy | Negotiations ordered; no immediate new tariffs |
Europe and Asia Face the Same Tension
The global backdrop mirrored the US dilemma. The European Central Bank held rates but kept further tightening on the table as higher financing costs threatened growth.
Japan’s central bank also held its policy rate and announced faster sales of its equity-fund holdings. Asian tech shares came under pressure from the US sell-off, a reminder of how quickly doubts about AI spending travel across borders.
Next Week: Elections, Jobs and Another Tech Test
Attention turns to the US midterm elections and the payroll report. Manufacturing and services surveys will show whether resilient headline growth is carrying into the new quarter.
Also Read: Weekend Market News: Wall Street’s AI Selloff, India’s Banking Reforms and RBI Credit Data
Fed speakers will be watched closely after a split vote. Scheduled tech reports will test demand and spending expectations again, and the Treasury’s refunding announcement will matter for bond supply.
| Date | Main events |
|---|---|
| Mon, Nov 2 | ISM manufacturing; Goolsbee; Apple scheduled report |
| Tue, Nov 3 | Midterm elections; JOLTS; AMD scheduled report |
| Wed, Nov 4 | ADP; ISM services; Treasury refunding; Qualcomm scheduled report |
| Thu, Nov 5 | Jobless claims; productivity; Hammack and Barkin |
| Fri, Nov 6 | Payrolls; unemployment; consumer sentiment; several Fed speakers |
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell securities. Onetrader is not a SEBI-registered investment adviser. Financial markets involve risk. Conduct your own research and consult a qualified financial adviser before making investment decisions.
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