The stock market ended Friday's session with substantial losses as the ongoing correction in AI-related stocks intensified, sending the major averages lower for the week. The S&P 500 (-1.8%), Nasdaq Composite (-2.9%), and DJIA (-1.1%) recovered somewhat from their afternoon lows but remained firmly in negative territory, with the technology-heavy Nasdaq bearing the brunt of the selling.

The information technology sector (-4.3%) was the worst performer by a wide margin, with the PHLX Semiconductor Index plunging 7.3% and closing below its 200-day moving average. Intel (INTC 65.76, -26.31, -28.58%) suffered a particularly severe post-earnings decline after issuing disappointing Q4 guidance, citing weakening PC demand amid rising memory prices and supply constraints that are limiting its ability to meet robust data center demand. The outlook also weighed heavily on PC manufacturers HP Inc. (HPQ 28.78, -3.05, -9.58%) and Dell (DELL 424.16, -51.35, -10.80%).

Sandisk (SNDK 1151.43, -178.62, -13.43%) was another major semiconductor laggard despite reporting better-than-expected earnings, as relatively modest revenue guidance upside and caution about seasonal demand trends overshadowed exceptional data center growth. NVIDIA (NVDA 204.78, -8.88, -4.16%) also retreated sharply, adding to the pressure on the semiconductor space and reinforcing concerns about increasingly demanding expectations for AI-related companies.

The weakness extended across mega-cap growth stocks, with the Vanguard Mega Cap Growth ETF (-3.1%) reflecting the continued unwinding of the AI trade. Amazon (AMZN 240.35, -3.44, -1.41%) weighed on the consumer discretionary sector (-0.9%) following an earnings miss and negative free cash flow despite accelerating AWS growth and record operating profitability. The company's plans for even greater infrastructure spending in 2027 added to concerns about the returns on massive AI investments.

The communication services sector (-1.1%) also struggled, with Alphabet (GOOG 278.22, -4.10, -1.45%)extending its post-earnings retreat and Reddit (RDDT 91.67, -37.93, -29.27%) suffering a sharp earnings-driven decline. Meanwhile, the industrials sector (-1.6%) faced significant pressure as weakness spread to AI infrastructure-related companies.

Selling pressure intensified steadily throughout the afternoon, briefly pushing the Nasdaq Composite down nearly 4.0% and extending its retreat from its October peak near 27,700 to roughly 9.0%. The index remained decisively below its 50-day moving average near 26,570, while the semiconductor index's break below its 200-day moving average underscored the deterioration in technical momentum.

Unlike Thursday's session, when widespread strength outside mega-cap technology stocks helped offset losses in the major averages, Friday's retreat was considerably broader. The S&P 500 Equal Weighted Index (-0.8%) also finished lower, while small- and mid-cap stocks faced meaningful selling pressure, leaving defensive strength insufficient to counterbalance the losses elsewhere.

The energy sector (+1.9%) was a notable exception, benefiting from continued strength in crude oil prices. WTI crude settled just above $104 per barrel, adding just under $1.00 for the week, while Chevron (CVX 235.48, +4.02, +1.74%) provided additional support after reporting better-than-expected earnings.

Defensive buying also supported the consumer staples sector (+1.4%), with Walmart (WMT 123.51, +2.26, +1.86%), Coca-Cola (KO 94.08, +1.26, +1.36%), and Mondelez Int'l (MDLZ 64.92, +2.39, +3.82%) among the standouts. The utilities (+0.6%), health care (+0.4%), and real estate (+0.2%) sectors managed more modest gains, with strong earnings reactions in Regeneron Pharma (REGN 927.89, +109.12, +13.33%) and Eli Lilly (LLY 1417.54, +43.84, +3.19%) contributing to the resilience of health care stocks.

Treasuries attracted some safe-haven buying despite elevated crude oil prices, providing a measure of support for interest-rate-sensitive areas of the market.

The week's disappointing finish highlighted a deepening correction in the AI trade, with investors increasingly questioning the pace of infrastructure spending, the sustainability of elevated growth expectations, and the ability of companies to translate strong demand into profitable returns. While defensive sectors continued to attract interest, Friday's widespread selling demonstrated that the rotation away from technology stocks is no longer providing enough support to prevent substantial losses across the broader market.

U.S. Treasuries finished the week on a firmly higher note, turning longer tenors positive for the week while shorter tenors extended this week's gains. The 2-year note yield settled down seven basis points to 4.59% (-9 basis points this week), and the 10-year note yield settled down six basis points to 4.93% (-6 basis points this week)

• Russell 2000: +13.3% YTD
• S&P Mid Cap 400: +10.8% YTD
• S&P 500: +10.7% YTD
• Nasdaq Composite: +9.4% YTD
• DJIA: +7.7% YTD

Reviewing today's data:

• The Q3 Employment Cost Index increased 0.8% (Briefing.com consensus 0.8%) to follow a 0.9% increase in Q2, with wages and salaries rising 0.7% while benefits rose 0.9%.
  • The key takeaway is that wages and salaries for civilian workers were up 3.1% year-over-year, maintaining a trend that continues undershooting inflation. This will feed ongoing concerns about pressure on discretionary spending activity.
• Oct Chicago PMI 55.3 (Briefing.com consensus 55.9; Prior 58.8)