Weekly Market Recap: Tech Stocks Lead U.S. Gains Amid AI Revival, Global Markets Follow Suit

Market Overview:

U.S. equities welcomed autumn with gains, led by tech stocks as AI enthusiasm surged again. The Nasdaq Composite climbed 0.7%, while the S&P 500 also rose 0.7%, hitting record highs for the 42nd time this year. The Dow gained 0.5%, though large-cap growth underperformed value, and small caps edged lower. A lighter week for market catalysts saw initial hesitation as markets awaited new economic data, with tech stocks bolstering performance later in the week. Strong earnings reports from Micron Technology, NRG Energy, and Accenture powered a tech rally on Thursday.

International markets also saw solid gains. In Europe, stocks were buoyed by expectations of interest rate cuts in the Eurozone and the U.S., supported by weak PMI data and rising CPI projections. Switzerland’s market rallied after the Swiss National Bank reduced rates by 0.25%. Meanwhile, China’s aggressive monetary easing package revitalized its stock market, delivering its best week since 2008. Elsewhere in Asia, Japan, Taiwan, South Korea, and India all saw positive gains.

In the fixed income market, Treasury yields moved higher despite the Federal Reserve's recent rate cut. The 10-year yield remained around 3.75%, and the two-year yield inched up to 3.56%. Commodities saw a 2% rise, with gold approaching record highs on expectations of global rate cuts. Silver and copper prices followed suit, supported by strong demand projections from China’s stimulus package.

Federal Reserve Insights and Economic Roundup:

The Federal Reserve's preferred inflation measure, core PCE, showed slower growth, rising 2.7% year-over-year. Despite the jumbo 0.5% rate cut, inflation continues to cool, reassuring investors. However, labor market concerns persisted as the September Consumer Confidence Index saw its largest dip since 2021, with fewer consumers describing jobs as “plentiful.” The final reading for Q2 GDP held steady at 3.0%, reflecting the U.S. economy’s resilience. Initial jobless claims remained stable, supporting the view that the labor market is gradually softening but not collapsing.

The Week Ahead:

Looking forward, the market will focus on key economic releases, including U.S. PMI data, jobless claims, and ISM indices for manufacturing and services. The employment report due Friday will provide insights into nonfarm payrolls, unemployment rates, and average hourly earnings, which will be closely watched as markets evaluate the Fed’s next steps.