The Fed held rates steady with two hawkish dissents, Oracle’s aggressive long-term targets lifted AI names, but Alphabet fell about 9% after missing expectations.
A wave of AI-related deals sent semiconductor shares soaring, helping the Nasdaq rally while investors prepared for the Fed and crucial earnings from Microsoft and Google parent Alphabet.
Let’s dig in following an up day on Wall Street to see what’s happened and what to expect.
Brent topped $116 and stocks pulled back on fears of renewed U.S.-Iran hostilities after the midterm elections. For the week, small caps led with the Russell 2000 up 2% while the S&P 500 and Nasdaq slipped.
Thursday’s selloff isn’t a signal to cut exposure. It is a signal to look where the money is going.
Worries about the sustainability of the AI trade surfaced once again, driving down a swath of related stocks, but other stocks rallied as Treasury yields dropped the most since August 2025, seeing equal-weight vs cap-weight the most extreme since 2024.
The gap is closing, but the opportunity is in new leaders, not broken AI names.
For those who read my nightly market updates, I have noted the past couple of weeks that the equal-weighted S&P 500 ($RSP) has “been able to hold up better” versus both the cap-weighted indices and the Russell 2000.
RSP took another step forward Wednesday confirming its Tuesday close above the 50-day moving average and extending its gain since the October 1 intraday low to over 4%. In addition, the daily MACD is strongly positive while the RSI is now over 60.
The weekly chart is solid, well above a rising 50-week moving average with the RSI also near 60. The weekly MACD is the one fly in the ointment not yet confirming the intermediate trend.
I initially took a small position at the daily MACD crossover two weeks ago with a stop at the October low, and then added a slug Wednesday on the extension over the 50-DMA, taking it to medium sized. I will hold that for now, going back to small sized on a break back below the 50-DMA. I will consider adding more depending on how things develop.
This was initially drafted premarket but it is continuing to hold up better this morning down just a touch versus the -1.3% decline in the S&P 500.
At the time of publication Sethi was long RSP.
Blowout SpaceX results lifted a swath of AI names, sending the Nasdaq up over 1%.
Easing long-term yields and oil prices lifted the Russell 2000 to its best day since early August and saw 9 of 11 S&P 500 sectors higher, even as weakness in Tech dragged on the cap-weighted index.
