US stocks ended the week on a positive note, bouncing back from Thursday’s regional bank selloff. The Dow rose 0.52%, S&P 500 climbed 0.53%, and the Nasdaq gained 0.52%, while the Russell 2000 fell 0.60%, dragged lower by small caps and retail-trading favorites. The gains helped the S&P and Nasdaq log solid weekly advances, despite some midweek turbulence.
Big tech mostly rallied, though Amazon continued to lag. Standout groups included credit card companies, payment processors, China tech, airlines, cruise lines, and logistics names. On the weaker side were GLP-1 drugmakers, industrial metals, custody banks, machinery, and trucking stocks. Bond yields rose again as Treasuries weakened, and gold prices slid 2.1%, though still finished the week up over 5%. Oil edged up 0.3% Friday but closed out a third straight weekly loss.
Markets continued to digest lingering concerns over credit risk in regional banks, stemming from recent headlines about Zions and Western Alliance. However, some analysts played down systemic concerns, noting these appear to be isolated issues. Outside of banks, the AI trade remained in focus, although concerns about frothy valuations persist. US-China trade tensions remained elevated but cooled slightly after President Trump told Fox Business the 100% tariff proposal was “not sustainable” and that he still expects to strike a deal.
The Q3 earnings season is heating up. American Express posted strong results and raised guidance, citing robust consumer spending. Jefferies rebounded after easing investor fears about its exposure to recent bankruptcies. Truist, Ally, and Fifth Third also reported solid earnings, helping calm nerves in the financial sector. Oracle pulled back after a big rally Thursday despite positive commentary on its AI business.
Economic data was limited due to the government shutdown, but sell-side estimates suggest jobless claims may have dipped last week. The Fed is now in its quiet period ahead of the October 29 FOMC meeting, where a 25-basis-point rate cut is widely expected. All eyes are now on next week’s September CPI report, scheduled for October 24.
Here’s Our Take:
Markets managed to stabilize Friday after Thursday’s credit risk scare, with upbeat earnings from big banks and consumer finance names helping ease concerns. While the selloff in regional banks has sparked headlines, most analysts see these as one-off events rather than signs of broader credit deterioration. That said, the market remains sensitive to any signs of weakness in the private credit space.
The consumer resilience theme is holding up — supported by strong results from American Express and solid commentary from banks. Meanwhile, AI stocks continue to generate excitement, though some investors are getting cautious about valuation and circular deal structures. With Q3 earnings picking up pace next week and macro data still scarce due to the shutdown, investors will be looking to earnings reports for clues on where the economy and market are headed next.
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