US stocks gave back early gains last week as selling in technology shares pulled the Nasdaq lower, while the S&P 500 and Dow also ended in the red. This week, investors will weigh results from Apple and other companies alongside Friday’s September jobs report and the outcome of the US midterm elections. Dow, S&P 500 and Nasdaq 100 futures are scheduled to open at 6 p.m. Eastern on Sunday; overnight futures moves do not necessarily predict how the cash market will trade the following session.
Nasdaq hits a three-month low as major indexes retreat
The Nasdaq Composite fell 2% for the week, including a 2.9% drop on Friday that took it to a three-month low and close to its 200-day moving average. The Dow Jones Industrial Average lost 0.85%, while the S&P 500 slipped 0.6% to a six-week low. Both the Dow and S&P 500 closed below their 50-day moving averages.
Small caps held up better: the Russell 2000 gained 1.3% for the week, though it surrendered some ground on Friday and finished just above its 200-day moving average. The equal-weighted S&P 500 ETF (RSP) rose 0.8% for the week despite falling 0.8% on Friday.
The decline in technology was concentrated in software, chips and artificial intelligence-related shares. Alphabet, Amazon, ServiceNow, Intel and Fortinet weakened, while Twilio added pressure to software stocks. Semiconductor and AI shares reversed after gains in the middle of the week; even previously resilient names such as NetApp fell sharply. Cloud growth at Amazon and Alphabet came alongside heightened concern about the companies’ spending, while Intel’s weak earnings guidance was another drag on the sector.
Most healthcare, retail and consumer, financial and industrial stocks rose over the week, although many fell on Friday. Higher oil prices supported energy shares, while refiners lagged. US crude futures gained 0.8% to $104.12 a barrel for the week and rose 15.15% in October. The 10-year US Treasury yield fell 6 basis points to 4.93% over the week, bringing its October decline to 36 basis points.
Sector ETFs diverge as software and chips weaken
The software ETF IGV fell 5.7% last week and broke below its 50-day moving average. Its major holdings include Palantir, ServiceNow and Fortinet. The semiconductor ETF SMH lost 0.9% for the week, but plunged 7% on Friday and tested its 200-day moving average. AMD and Intel carry significant weight in the fund.
ARK Innovation ETF (ARKK) declined 1.5%, while ARK Genomic Revolution ETF (ARKG) gained 6.7%; both fell sharply on Friday. Tesla and SpaceX are significant holdings across ARK Invest funds. Elsewhere, the metals and mining ETF XME gained 1.5%, the energy ETF XLE rose 1%, healthcare ETF XLV advanced 3.1%, industrials ETF XLI added 1.7% and financials ETF XLF gained 1.1%. Eli Lilly accounted for much of XLV’s advance.
Midterm results could shape expectations across sectors
Pre-election polls indicated that Democrats could regain control of the House, while the Senate contest remained uncertain. Investors are watching for possible policy implications for AI, health insurance, hospitals and the cryptocurrency industry. A change in Congress could affect Medicaid spending and subsidies tied to the Affordable Care Act. Crypto legislation, which had already stalled, could also be affected.
Market strategists have said that different election outcomes could prompt different reactions in AI stocks. Some expectations may already be reflected in share prices, however, and the market’s eventual response may not match pre-election forecasts. Stocks could swing in one direction after the results and then reverse, making the market’s interpretation of the outcome as important as the result itself.
Issues involving Elon Musk’s SpaceX and Tesla are also drawing attention. In energy markets, developments concerning Iran and their effect on oil prices are among the factors traders are monitoring.
Apple, AMD and Palantir among companies reporting
Apple, AMD, Palantir, Shopify, Lumentum, Arista Networks, SharkNinja, Cloudflare, Amgen and Ethos Technologies are among the companies scheduled to report results. Apple and Ethos are due to report on Monday, ahead of the election. Apple is near a technical area watched by analysts, although earnings growth is expected to slow. Ethos, a growth company in the insurance sector, is within a corresponding watch area; Amgen is also approaching one, while SharkNinja is somewhat extended.
AMD, Palantir and Shopify still showed potential technical setups on Thursday, but fell on Friday. Recent trading has left Lumentum, Cloudflare and Arista in a notably weaker position.
The Labor Department’s September employment report, due Friday, will cap a week of major economic releases. The data may influence views on the state of the economy, but trading is also being shaped by corporate earnings, the election and volatility in technology stocks.