The S&P 500 slipped just 0.08% last week as the Federal Reserve delivered its first rate hike in three years and an AI safety debate rattled tech stocks before fading. The Dow fell 1.7% for a third straight losing week, dragged down by banks, while the Nasdaq gained 0.7% as investors bought back into AI names.
The S&P 500 held nearly flat last week, slipping just 0.08%, even as the Federal Reserve raised rates and a public dispute over artificial intelligence safety shook tech stocks. The Nasdaq fared better, gaining 0.7%. The Dow lagged, with a 1.7% drop marking its third straight losing week.
Fed hike sends bank stocks lower
The Fed raised rates by a quarter percentage point on Wednesday, its first hike in three years. The increase brought its benchmark to a range of 3.75% to 4%. Fed Chairman Kevin Warsh said at his post-meeting news conference: "inflation is too high and has been for too long", adding that the increase would support a return to the central bank's 2% inflation target. The move was widely expected, but Warsh's repeated references to price pressures sent stocks sharply lower on Wednesday, before a snap-back rally Thursday and a flat session Friday.
Banks absorbed the brunt of the interest rate hike. Goldman Sachs lost nearly 8.5% for the week, and the 10-year Treasury yield finished the week back at 5%, after touching nearly two-decade highs above 5.04% during a Tuesday oil surge.
AI safety dispute shakes tech before fading
The AI trade wobbled after Anthropic CEO Dario Amodei's Sept. 12 essay called for a slowdown in frontier model development, a view OpenAI's Sam Altman and SpaceX's Elon Musk quickly echoed. Nvidia CEO Jensen Huang pushed back against industry-wide coordination, arguing companies can test and hold back products internally instead.
Chipmakers Intel and Micron each fell just over 5% on Monday, and data center plays GE Vernova and Eaton dropped roughly 9% and 8%, respectively. But the group recovered much of those losses as the week went on. Cybersecurity stocks CrowdStrike and Palo Alto Networks fared best, rising almost 15% and 10%, respectively.
Oil added to the volatility. West Texas Intermediate and Brent crude hit their highest levels since mid-May on Tuesday on Mideast conflict-driven supply concerns, before a three-session slide brought both closer to flat for the week.
Source: CNBC
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