U.S. equities ended the week on a down note as technology names weakened and the climb in longer-dated Treasury yields weighed on sentiment. Market participants expressed disappointment that discussions between President Donald Trump and Chinese President Xi Jinping did not produce firm policy agreements, a development that contributed to risk-off positioning.
The S&P 500 closed down 1.24% at 7,408.50. The Nasdaq Composite dropped 1.54% to 26,225.14, while the Dow Jones Industrial Average slid 537 points, or 1.07%, to finish at 49,526.17. Over the week, the S&P 500 managed a modest gain of 0.13%, while both the Dow and the Nasdaq recorded small weekly declines of less than 0.2%.
Pressures came from the fixed-income market as yields on longer-dated Treasuries moved higher; notably, the 30-year rate breached 5.1%. A series of recent inflation readings suggested renewed price pressures, in part linked to elevated oil prices driven by the ongoing Middle East conflict. That mix - higher yields and rising energy costs - tended to hit high-growth technology stocks particularly hard.
Oil also climbed, with Brent crude futures reaching roughly $110 a barrel before settling slightly lower, trading just above $107 on Monday. Higher oil costs were cited among the contributors to the inflation backdrop that influenced market behavior.
Earnings calendar highlights
Market focus shifts toward corporate results that will offer insight into two themes central to current market narratives: the strength of artificial intelligence-related spending and the resilience of the U.S. consumer amid persistent inflation.
AI-focused chipmaker Nvidia is scheduled to report results on Wednesday, as the first-quarter earnings period nears conclusion. Nvidia shares have risen about 36% since a March low, while the Philadelphia Semiconductor Index has climbed more than 60% over the same interval, reflecting strong demand for chips tied to investments in data centers and AI infrastructure.
Retail heavyweight Walmart will report on Thursday, with other major retailers including Home Depot, Target and the TJX Companies also due to post results this week. Those reports will provide a broad gauge of how consumers are coping with continued inflationary pressure.
Analysts' perspectives
"U.S. growth remains positive and is now improving, with the economy seemingly exiting Slowdown and proceeding into Expansion. Markets are reflecting the shift, rewarding revenue growth and capex growth, while earnings expectations continue to advance. The backdrop remains supportive, but expectations are rising and risks from financial conditions linger." - BCA Research
"Strong equity markets (outside of Fridays sell-off), upside inflation surprises, and resilient growth likely cannot coexist indefinitely. Something eventually has to give. The core tension in markets is that rates increasingly reflect a higher-for-longer inflation regime, while equities continue to price a far more benign outcome. Our bias is that rates likely continue repricing higher until either growth weakens, equities begin to crack more materially, or Trump reaches his pain threshold and takes a deal with Iran." - Wolfe Research
"On Thursday SPY had a daily RSI of 78. On Friday, SPY lost -1.2%. Since 2003, there have only been six prior times when SPY lost more than 1% immediately following an RSI of 75+. Average returns are negative on every timeframe from 5-40 days. Five of the six occurrences saw at least a -7% peak-to-trough decline over the ensuing weeks with the one exception (’23) trading sideways." - BTIG
"Cyclicals are beating Defensives ytd, in both Europe and the U.S., and this is with or without Tech/AI impact. We believe Cyclicals outlook later on in 2H continues to look strong, but from here tactically there could be a pause." - JPMorgan
"The Pandemic changed everything. Warlike stimulus, surging M2, and a productivity shock collide with an AI Revolution - reminiscent of the 1920s and 1990s. All support Evercore Strategys expectation that AI-exposed Info. Tech., Comm. Svcs. and Cons. Disc. Lead the S&P 500 to 7,750 by YE 2026; 30% chance of a Bull Case to 9,000. At the same time, the worlds of past booms collide with geopolitical shocks and sticky inflation. A more binary post-Pandemic World raises the probabilities of extreme outcomes, up and down." - Evercore ISI
Market internals and sector action
Semiconductors and AI-linked names showed particular vulnerability on Friday. The semiconductor-focused ETF SMH posted its worst session since March, sliding 3.8%. Market breadth was weak, with roughly 70% of NYSE volume occurring in declining stocks, suggesting that selling pressure was widespread rather than isolated to a few names.
Observers noted that crude and higher rates have exerted downward pressure on much of the market for several weeks, and last week brought the first clear sign that semiconductors and AI-exposed stocks might be catching down toward the broader market rather than pulling the market higher.
What to watch this week
- Nvidias quarterly results and any commentary on AI-driven enterprise spending.
- Walmart and other major retailers earnings for signals on consumer demand amid inflation.
- Moves in longer-dated Treasury yields and oil prices that could influence earnings risk and sector performance.
These developments will be central to assessing whether recent market leadership from AI and semiconductors can sustain itself in the face of rising rates and an inflation backdrop amplified by energy costs.