Stocks Recovered From an AI-Fueled Drop To End The Week Despite Higher Oil Prices And Bond Yields
Stocks climbed on Friday and ended the week on a high note after an AI-fueled drop on Thursday.
The S&P 500 gained 0.59%, while the tech-heavy Nasdaq Composite did so 0.64%. The Dow Jones Industrial Average overperformed, increasing 0.83%.
Oil prices remained elevated even though President Donald Trump said Russian counterpart Vladimir Putin agreed to supply diesel to the U.S. and global market to further address supply crunches stemming from the war in the Middle East.
Iran, in turn, announced on Friday that it will escalate hostilities in the Strait of Hormuz as prospects of an agreement with the U.S. continue to be elusive.
The Iranian Revolutionary Guard Corps said in a statement that it will now pursue vessels that don’t transit the routes it has approved even outside the waterway and “throughout the entire region,” and that “its punishment will be definitive.”
Tech shares rebounded after falling on Thursday following reports that OpenAI’s annualized revenue hit $50 billion at the end of last month, lower than the $68 billion that had been previously reported.
Another report detailed on Friday that the company expects the figure to hit $70 billion by the end of the year, 40% more than September.
The company shared the figure with investors as part of its latest fundraising effort. It is seeking to raise at least $30 billion at a $1.4 trillion valuation, Bloomberg reported. The company raised $122 billion in March at a $852 billion valuation, which included the funding.
Elsewhere, consumer sentiment hit a five-month low in October after dropping further over the first days of the month.
The survey of consumers from the University of Michigan showed the figure at 46.3, compared to 48.1 last month. It is also a 13.6% drop compared to the same month last year.
Surveys of Consumers Director Joanne Hsu detailed in a statement that “buying conditions for durables plummeted amid high prices and borrowing costs.”
Looking at the partisan divide, she noted that “increases in sentiment among Democrats and Republicans were offset by a decline among independents this month.”
“Overall, sentiment for lower-income consumers and those with smaller stock porfolios dropped steeply this month, groups that have fewer resources to weather increases in prices. Frustration over cost-of-living continues to mount, as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year,” she added.
As for year-ahead inflation expectations, they increased by 0.1 percentage points, from 4.6% and 4.7%. “The current reading substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 readings. Long-run inflation expectations also stepped up from 3.4% in September to 3.5%, notably higher than their 2024 range of 2.8% to 3.2%,” Hsu said.
