Market Insights

Stocks keep climbing, although most of the gains are coming from a narrow group associated with AI and data-center investment.

The S&P 500 rose 0.7 percent between Friday, October 24, and Friday, October 31. Two-thirds of the index’s members lost value as non-tech stocks lagged. The Nasdaq-100 climbed almost 3 times as much as the S&P 500, highlighting strength in the chipmakers and hyperscalers driving the current tech boom.

AI investment remained the dominant theme. Four megacaps increased their capital spending plans while reporting earnings last week: Meta Platforms (META), Amazon.com (AMZN), Microsoft (MSFT) and Alphabet (GOOGL). Semiconductor and data-storage companies like Teradyne (TER) and Western Digital (WDC) also shot to new highs on strong results and guidance.

Nvidia (NVDA) — the pioneer of AI — became the first company to reach a $5 trillion market capitalization. The move began on Tuesday after CEO Jensen Huang cited the potential for $500 billion of GPU sales through the end of next year. The company also announced production of its Blackwell chips in Arizona and gained further after President Trump suggested he may let China buy the advanced AI processor. (NVDA earnings are due on November 19.)

The boom spread to a handful of companies beyond tech. Trucking firm C.H. Robinson (CHRW) had its biggest weekly gain in 18 years after using AI to automate tasks. That helped profit beat estimates despite revenue missing, highlighting the margin-improvement potential of machine learning. Caterpillar (CAT) also rallied 10 percent, its best week since 2022, after AI demand for power systems pushed earnings and revenue ahead of estimates.

Biotech Accelerates

Biotechnology stocks continued their stealth rally. Regeneron Pharmaceuticals (REGN) led the move by reporting strong results and lowering its capital-spending plans. There was also a bidding war for Metsera (MTSR), which has late-stage compounds for obesity and cardiometabolic diseases.

Transportation stocks gained after United Parcel Service (UPS) beat estimates. FedEx (FDX) and CHRW added to the gains.

Technology and consumer discretionaries were the only sectors to outperform the S&P 500 last week.

Real estate fared the worst on signs of weakening fundamentals. Alexandria Real Estate Equities (ARE) disclosed potential impairments on properties. That may add to worries that assets financed at lower interest rates last decade are less valuable in the current environment. CoStar (CSGP), a real-estate data provider, plunged despite strong quarterly results.

Materials companies also fell after weak consumer spending and trade wars hurt demand for boxes and packaging. International Paper (IP) and Smurfit WestRock (SW) both missed estimates and led the downside.

Consumer staples lagged as tobacco company Altria (MO) plunged on a revenue miss.

Payments company Fiserv (FI) and burrito chain Chipotle Mexican Grill (CMG) had their biggest weekly declines ever. FI cut guidance and then further unnerved investors by reshuffling leadership and pivoting its strategic plan. CMG issued weak results as comparable sales slowed.

How Dovish Is the Fed?

President Trump met with Chinese President Xi in Korea on Thursday. The two leaders reversed much of their recent trade war. Beijing will pause export controls on rare-earth minerals for a year and Washington will lower tariffs from 57 percent to 47 percent. The U.S. will also postpone a rule blacklisting Chinese-controlled companies from purchasing advanced technology.

The Federal Reserve lowered interest rates by 25 basis points as expected. However the tone was slightly less dovish than anticipated. Kansas City Fed President Jeffrey Schmid voted against the cut and Chairman Jerome Powell said further easing “is not a foregone conclusion — far from it.”

The market reacted by reducing the odds of another reduction on December 10 from 92 percent to 63 percent, according to CME’s FedWatch tool. Mortgage rates also increased and Nomura predicted rates won’t move again this year.

Several policymakers deliver speeches this week, which could further impact the outlook. Traders may watch those comments for more signals on the future of interest rates.

AI’s Halo Effect

Last week saw widening effects of the AI boom.

Reuters reported that OpenAI, the parent of ChatGPT, is planning an initial public offering in the second half of 2026. It could be the first IPO valued above $1 trillion.

AMZN announced it will cut as many as 30,000 jobs, partially because of efficiency gains from AI.

Exxon Mobil (XOM) is working with data centers to potentially capture their carbon emissions from burning natural gas. It follows similar moves by Baker Hughes (BKR) and Halliburton (HAL) to increase their exposure to the fast-growing AI industry.

PayPal (PYPL) announced its digital wallet will be embedded in OpenAI’s ChatGPT, which fueled a brief rally in the stock price. Eli Lilly (LLY) and NVDA also revealed plans to build a drug-discovery supercomputer using AI.

S&P 500, daily chart, with select patterns and indicators.

Charting The Market

The S&P 500 remains in an apparent uptrend with few bearish signs.

On Friday, the index held above the previous week’s high of 6,807 and its rising 8-day exponential moving average (EMA). The 9-day rate of change also turned sharply positive and the moving average convergence/divergence (MACD) oscillator is rising.

Those patterns may be viewed as consistent with short-term bullishness.

Breadth has narrowed as large technology stocks account for most of the gains. While that’s sometimes viewed as a negative, in recent years it has highlighted leadership in the market’s most important names.

The Week Ahead

This week brings more earnings (about one-quarter of the S&P 500) and some economic events. Several Fed policymakers will also speak.

The Institute for Supply Management’s manufacturing index is due today, along with a speech from Fed Governor Lisa Cook. Palantir Technologies (PLTR) issues results in the afternoon.

On Tuesday, Pfizer (PFE) and Uber Technologies (UBER) report earnings in the premarket. Fed Governor Michelle Bowman will speak. Advanced Micro Devices (AMD), Arista Networks (ANET) and Amgen (AMGN) follow in the postmarket.

Wednesday features ADP private-sector payrolls, ISM’s service-sector report and crude-oil inventories. Robinhood (HOOD), Qualcomm (QCOM) and AppLovin (AAP) report after the closing bell. The U.S. Supreme Court will also hear oral arguments on President Trump’s tariffs.

Thursday is busy:

• Appearance by Fed Governor Michael Barr, plus St. Louis Fed President Alberto Musalem
• Tesla (TSLA) shareholders vote on CEO Elon Musk’s pay package
• Premarket earnings include Datadog (DDOG), Moderna (MRNA) and Tapestry (TPR)
• Postmarket earnings include Airbnb (ABNB), Trade Desk (TTD) and Wynn Resorts (WYNN)

Friday brings consumer sentiment and a speech by Fed Vice Chair Philip Jefferson. Results are due from KKR (KKR) and Constellation Energy (CEG).