The major averages finished mostly higher for the week as pronounced strength in semiconductor and mega-cap growth stocks outweighed a sharp midweek rise in Treasury yields and weakness across much of the broader market. The S&P 500 gained 1.2% and the Nasdaq Composite climbed 2.1%, while the DJIA advanced a more modest 0.3%, snapping a three-week losing streak. Small- and mid-cap stocks moved in the opposite direction, with the Russell 2000 falling 0.8% and the S&P Mid Cap 400 slipping 0.1%.
Technology was the primary source of support throughout the week. The information technology sector gained 3.1%, with renewed enthusiasm surrounding AI development and infrastructure spending. Mega-cap growth stocks also played an outsized role. That combination powered Monday's strong advance and helped the Nasdaq Composite reach fresh all-time highs on Tuesday.
The headline gains nevertheless masked considerably weaker performance beneath the surface. The S&P 500 Equal Weighted Index fell 1.0%, trailing the cap-weighted index by more than two percentage points, while small-cap stocks also finished firmly lower. The divergence was evident across the sector standings, where financials (-1.6%), real estate (-1.4%), and consumer discretionary (-0.5%) sectors declined despite the S&P 500's weekly gain. The utilities sector fell 3.2%, making it the week's weakest-performing sector.
Interest rates were a major factor behind that uneven participation. Treasury yields surged Wednesday after stronger-than-expected preliminary September PMI readings and hawkish Fed commentary reinforced expectations for additional policy tightening. The 10-year note yield jumped 14 basis points that session and continued higher Thursday, reaching 5.18%, before easing modestly on Friday. It still finished the week 16 basis points higher at 5.16%. The increase weighed particularly heavily on smaller companies and rate-sensitive areas even as technology stocks proved comparatively resistant to the backup in yields.
Crude oil provided a more favorable influence on the weekly picture despite substantial volatility. WTI began the week with a sharp decline amid hopes for diplomatic progress between the U.S. and Iran, then rebounded above $96 per barrel as negotiations surrounding the Strait of Hormuz remained uncertain. Encouraging developments later in the week helped crude reverse course again, leaving WTI down nearly 4% for the week. The decline contributed to a 3.0% loss in the energy sector but also helped alleviate some of the inflation-related pressure facing the broader market.
Other areas provided additional support, with the communication services sector gaining 2.2% and the health care sector rising 1.7%. Software stocks also participated in the technology advance.
Overall, the week produced solid gains for the cap-weighted S&P 500 and Nasdaq, but participation remained notably uneven. Semiconductor and mega-cap growth leadership was strong enough to overcome rising Treasury yields and weakness across many other areas, while the Equal-Weight S&P 500 and Russell 2000 finished lower. The late-week retreat in crude oil provided some relief from inflation concerns, but elevated yields and the prospect of additional Fed tightening remained important constraints on the broader market.
Nasdaq Composite: +2.1% week-to-date
S&P 500: +1.2% week-to-date
DJIA: +0.3% week-to-date
S&P Mid Cap 400: -0.1% week-to-date
Russell 2000: -0.8 week-to-date