Tech Stocks Lead, but Rally Fades Late
Wall Street’s early rally lost steam Friday as traders weighed blockbuster tech earnings against mounting political and economic uncertainty.
The S&P 500 (^GSPC) ended up 0.1%, while the Nasdaq Composite (^IXIC) rose 0.5% before paring gains into the close. The Dow Jones Industrial Average (^DJI) slipped 0.2%, weighed down by weakness in industrials and financials.
Despite the late-session fade, all three major indexes remained on track for weekly and monthly gains, with the Nasdaq poised to notch its first positive October in two years.
Driving the optimism was Amazon (AMZN), which surged to an all-time high above $250 after delivering stronger-than-expected Q3 results. Revenue from Amazon Web Services jumped 20%, signaling a revival in enterprise cloud spending.
Apple (AAPL) also impressed investors with upbeat guidance heading into the holiday quarter, briefly topping $277 per share before giving back gains.
Elsewhere in tech:
- Nvidia (NVDA) shares fluctuated after announcing plans to supply 260,000 AI chips to South Korea’s public and private sectors — part of its global expansion push.
- Netflix (NFLX) gained after confirming a 10-for-1 stock split, signaling confidence in long-term growth despite increasing streaming competition.
The AI and Cloud Trade Still Drives Wall Street
Earnings from the so-called Magnificent Seven have reinforced a common theme: AI and cloud demand remain the strongest tailwinds for Big Tech heading into 2026.
Amazon’s cloud rebound, Alphabet’s recent $100 billion quarter, and Microsoft’s 40% Azure growth highlight that enterprise spending on AI infrastructure is accelerating, not cooling.
However, some investors are beginning to question the sustainability of these valuations as capital expenditures soar across the sector, raising fears of a potential bubble — a theme recently explored in WSA’s coverage of Tech’s $380 Billion AI Spending Spree.
Policy Uncertainty Adds Friction to Market Momentum
Even as corporate earnings power higher, political risk is reemerging as a drag on sentiment.
The U.S. government shutdown, now stretching deep into the month, has become the longest in modern history, with ripple effects hitting multiple sectors:
- Federal workers such as air traffic controllers have gone without pay, leading to growing disruptions across transportation.
- SNAP benefits (food stamps), relied upon by roughly 1 in 8 Americans, are at risk of suspension amid funding delays.
- A coalition of more than two dozen states has filed suit to block the potential freeze of benefits.
- Military paychecks are expected to be temporarily covered, but future payments remain uncertain.
Meanwhile, health care and insurance markets are entering a politically sensitive period, with Affordable Care Act open enrollment beginning this weekend. Disagreements over extending government subsidies have become a central sticking point in budget negotiations.
With lawmakers expected to return next week, the impasse is already testing investor confidence in the resilience of consumer spending heading into year-end.
Market Outlook: Cautious Optimism Meets Political Risk
Despite headwinds from Washington, the market tone remains cautiously bullish.
Corporate profits continue to surprise to the upside, and the Federal Reserve’s recent rate cut has helped ease pressure on credit markets.
But volatility could spike if the shutdown drags on or if inflationary pressures return from renewed government spending once the impasse ends.
“Investors are still willing to look through the noise,” one strategist said, “but every additional week of government dysfunction chips away at the confidence driving this rally.”
WSA Take
Friday’s session captures the tension defining today’s markets: AI euphoria on one side, political chaos on the other.
Amazon’s record-setting quarter underscores how the AI and cloud economy continues to power U.S. growth, even as Washington’s dysfunction threatens the macro backdrop.
This balance between innovation momentum and policy paralysis is likely to shape trading through the end of the year.
Read our recent analysis of Exxon’s push to power AI data centers with carbon-captured energy.
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Disclaimer:
Wall Street Access does not work with or receive compensation from any public companies mentioned. Content is for informational and educational purposes only.
