The S&P 500 Index ($SPX) (SPY) fell by -0.52% on Friday, the Dow Jones Industrial Average ($DOWI) (DIA) fell by -1.23%, and the Nasdaq 100 Index ($IUXX) (QQQ) was unchanged. December E-mini S&P futures (ESZ26) fell -0.48%, while December E-mini Nasdaq futures (NQZ26) rose +0.08%.
The US stock market remained on the defensive Friday after Thursday’s sharp risk-off sell-off, which saw the S&P fall -1.2% and the Nasdaq 100 fall -2.9%. Investors dumped chip and AI-related stocks on Thursday as anxiety continues about whether the AI theme will pan out from a profitability standpoint. However, a partial recovery in chip stocks Friday helped to support the Nasdaq 100 index.
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Higher oil prices weighed on stocks again Friday, with WTI crude oil prices rising by more than +4% in post-close trading. Oil prices rallied sharply on Thursday and Friday on worries about persistent Houthi attacks on Saudi Arabia and increased speculation about whether the US and Israel will launch new military attacks on Iran and/or the Houthis after next week’s Israeli election and the November 3 US election. The New York Times reported Thursday that the US and Israeli militaries have developed specific plans for renewed military strikes against Iran after the US and Israeli elections, although the report said President Trump has not yet approved those plans.
Meanwhile, President Trump’s Ambassador to the UN, Mike Waltz, told the Financial Times that the US is preparing for a protracted struggle with Iran and could still be mired in a stalemate a year from now. He added that the US Navy can maintain its blockade of Iranian ports for the “foreseeable future” and the administration is tightening economic pressure on Tehran.
The preliminary Oct S&P US manufacturing PMI rose +0.1 to 56.0, stronger than expectations for a -0.4 point decline to 55.5. The preliminary Oct S&P US services PMI fell by -0.9 to 57.9, which was slightly weaker than expectations for a -0.8 point decline to 58.0.
The final-Oct University of Michigan US consumer sentiment index was revised higher by +1.7 points to 48.0 from the preliminary 46.3, stronger than market expectations for an unrevised 46.3. However, the Oct index of 48.0 was down by -0.1 point from September’s report of 48.1 and posted a 5-month low.
Stocks are supported by the prospect of solid quarterly earnings. According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +25% from a year earlier, up from a July estimate of 22%. As of Friday, 120 of the S&P 500 companies have reported results, with 80% beating estimates.
Markets are discounting a 9% chance of a +25 bp Fed rate hike at next week’s FOMC meeting on October 27-28.
Overseas stock markets closed mixed on Friday. The Euro Stoxx 50 closed down -0.31%. China’s Shanghai Composite closed up +0.89%, reversing part of Thursday’s loss of -1.48%. Japan's Nikkei-225 Stock Average closed down -0.34%, adding to Thursday’s loss of -2.65%.
Interest Rates
December 10-year T-notes (ZNZ6) fell -10.5 ticks, following Thursday’s sharp rally of +1-07/32 points. The 10-year T-note yield rose +4.6 bp to 4.999%, retracing about a third of Thursday’s -16 bp plunge.
T-note prices on Friday fell back on some long liquidation after Thursday’s sharp rally, which was sparked by safe-haven demand tied to the sharp sell-off in stocks and fears that the US might soon resume military attacks on Iran.
Bearish factors for T-note prices on Friday included higher oil prices and a +1.2 bp rise in the 10-year breakeven inflation expectations rate.
European government bond yields rose. The 10-year German bund yield rose +1.1 bp to 3.345%. The 10-year UK gilt yield rose +3.1 bp to 5.356%.
Markets are discounting a 3% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
The Magnificent Seven all closed lower on Friday, except for Microsoft (MSFT), which closed up +0.7%. Meta (META) closed -1% lower, adding to Thursday’s loss of -7.0% that was tied to concern about its huge bet on AI. Tesla (TSLA) fell -0.6%, adding to Thursday’s loss of -3.2% that was tied to its mixed earnings report Wednesday afternoon.
SpaceX (SPCX) rallied +1.9% on Friday after Bloomberg reported late Thursday afternoon that the company is in talks with at least one major cellular infrastructure company to secure access to at least 80,000 cell towers to fulfill its ambition of becoming the fourth major wireless company. Cell tower companies rallied on the news, with Crown Castle (CCI) rallying +9.1% and American Tower Corp (AMT) rallying +4.1%. Meanwhile, wireless carriers fell on the possible entry of another major cellular player, with AT&T (T) and T-Mobile (TMUS) both falling about -8%.
Chip stocks are recovered somewhat on Friday, with the iShares Semiconductor ETF (SOXX) rising +0.5% after its -6.8% plunge on Thursday. Micro Technology (MU), GlobalFoundries (GFS), and Marvell (MRVL) closed up more than +2%.
Crypto stocks closed mostly lower, even though Bitcoin on Friday recovered by +0.2%, a small part of Thursday’s -4.1% sell-off. Galaxy Digital (GLXY), Bullish (BLSH), and Mara Holdings (MARA) fell by more than -3%.
American Express (AXP) fell more than -3% after reporting that transactions on credit cards and other products in the latest quarter were below the market consensus and that revenue of $454 billion was slightly below the consensus. However, Amex boosted its full-year earnings guidance, and Q3 adjusted earnings of $4.68 per share were above the consensus of $4.49.
Norwegian Cruise (NCLH) fell -2.8% after a rating downgrade by JPMorgan to underweight from neutral and a price target cut to $11 from $13.
SLB (SLB) rallied more than +7% after the oilfield services company, previously named Schlumberger, reported above-consensus earnings as Middle East activity improved.
Earnings Reports (10/26/2026)
Verizon Communications Inc (VZ), Liberty Live Holdings Inc (LLYVA), Whirlpool Corp (WHR), Simpson Manufacturing Co Inc (SSD), Welltower Inc (WELL), Amkor Technology Inc (AMKR), Public Storage (PSA), Rambus Inc (RMBS), Brown & Brown Inc (BRO), Principal Financial Group Inc (PFG), Cincinnati Financial Corp (CINF), Alexandria Real Estate Equitie (ARE), Brixmor Property Group Inc (BRX), Cadence Design Systems Inc (CDNS), Sun Communities Inc (SUI), Nucor Corp (NUE).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.