Week In Review 

Stocks finished a volatile week lower, punctuated by a sharp downside reversal on Thursday that saw the S&P 500 give up nearly 2% in gains – an intraday swing only outdone on April 7, 2020 (COVID crash), and April 8, 2025 (Liberation Day fallout). While strong earnings from Walmart and Nvidia provided some support, the market was ultimately weighed down by renewed skepticism regarding AI capital expenditures and "upheaval" surrounding Google’s Gemini 3 launch, which initially appears to significantly outperform other AI model releases. Investors also digested a raft of delayed economic data and shifting expectations for the Federal Reserve's December meeting.

Major indices finished the week in negative territory, with the S&P 500 and Nasdaq both breaking below their 100-day moving averages. Small Caps were a relative bright spot, outperforming broader indices, while Value factors held up better than Growth.

From a sector perspective, defensive areas such as Health Care and Consumer Staples (led by retailers like Walmart) outperformed. Technology was the significant underperformer, falling nearly 5% as "AI scrutiny" gained traction. Energy also struggled, dropping more than 3% amid declining crude prices. Despite Nvidia delivering a beat-and-raise quarter with $35 billion in revenue, the stock remained volatile, unable to fully counter the broader market's concern over "capital constraints" and the sustainability of AI returns on investment.

Treasury yields finished the week slightly lower, flattening after a mid-week spike. The move lower was driven primarily by comments from New York Fed President John Williams, who stated he sees room for a rate move "in the near term" to bring policy closer to neutral. Following his remarks, the odds of a December rate cut jumped from ~40% to roughly 70%. Corporate credit spreads have perked up, with specific focus on the widening of credit default swaps (CDS) for major tech issuers like Oracle, which have tripled in recent months.

Bitcoin continued it’s recent unraveling this week, with prices under pressure and futures down 10% this week and nearly 25% this month in what some analysts are calling a "liquidity black hole". Fundstrat’s Tom Lee has highlighted that recent crashes are being driven not just by policy, but by a massive "liquidation storm" that has damaged market maker balance sheets. According to Lee, market makers—who act as the "invisible central banks" of crypto—lost billions in recent volatility, forcing them to withdraw liquidity and creating a "crypto version of quantitative tightening". This lack of order book depth means even small sell-offs can trigger outsized drops, a dynamic exacerbated by the "global liquidity drag" flagged in broader macro data.

Economic data this week was highlighted by the delayed release of September’s nonfarm payrolls, which showed the economy added +119K jobs, well above the +50K consensus, though the unemployment rate unexpectedly ticked up to a four-year high of 4.4%. The labor market picture was further complicated by initial jobless claims, which dipped to 220K, while continuing claims rose to 1.974 million, the highest level since November 2021. In manufacturing, the Empire State Index surged to +18.7—its highest reading since November 2024. The Flash Manufacturing PMI came in just below expectations at 51.9, and the Services PMI rose slightly and in-line with expectations at 55.0. Meanwhile, the housing market showed some life as the NAHB Housing Market Index rose to 38.0 (the highest since April 2025) and October existing home sales hit a 4.1 million SAAR pace, though builders reported record-high price cuts to move inventory.

The White House formally pivoted toward an "affordability" focus this week, lifting reciprocal tariffs on specific agricultural products including beef, coffee, bananas, and orange juice. This move is part of a broader administration push to offer relief to consumers, which also includes a proposal for $2,000 tariff "dividend" payments; however, officials concede this would require legislative approval, and congressional Republicans have so far been cool to the idea. Additionally, planned semiconductor tariffs were reportedly delayed to manage tensions with China and avoid further consumer price spikes. Regarding the broader IEEPA tariffs currently under legal challenge: if they are eventually overturned by the Supreme Court, refunds would not be automatic. Importers would generally need to have filed administrative protests (typically within 180 days of liquidation) to preserve their right to a refund, and legal experts warn the administration could still delay payouts through further litigation or by leveraging other statutory authorities.

This week's volatility underscores the tension between solid corporate fundamentals (like Nvidia's earnings) and macro headwinds (rates, tariffs, and positioning). While the "seasonality" trade remains a popular bullish talking point for year-end, the breach of technical levels (100-DMAs) warrants monitoring. Despite fear returning to markets recently, the Q3 earnings season (~95% complete) has been one of the strongest in the last few years in terms of both results and forward guidance, and the Fed is still in the middle of an easing cycle with markets pricing in 70% odds of a December cut and ~90bps in cuts by the end of 2026 – this is typically a good backdrop for markets and periodic pullbacks should be expected.

Key events to watch next week
FactSet estimates in parenthases unless otherwise noted.
*Denotes data scheduled to be released but potentially delayed because of the government shutdown

Monday: US Dallas Fed Index (-2.0)
Tuesday: US PPI – delayed September release (Headline - m/m: 0.3% | y/y: 2.6% -- Core – m/m: 0.3% | y/y: 2.7%), US Consumer Confidence (93.3), US Pending Home Sales (m/m: 1.6%), US Richmond Fed Index (-5.0)
Wednesday: US Durable Goods (m/m: 0.15%), US Initial Claims (230k), US Continuing Claims (prev. 1,974k), US Chicago PMI (43.5), US New Home Sales (SAAR: 706k), US PCE Deflator (m/m: 0.2% | y/y: 2.7%), US Core PCE Deflator (m/m: 0.2% | y/y: 2.9%)
Thursday: US – Markets Closed – Thanksgiving Holiday
Friday: none

Past performance does not guarantee future results, which may vary.
Source: FactSet, MidWestOne Private Wealth.
All returns presented are total returns, which include the reinvestment of income and dividends.
For style performance, Large, Mid, and Small for US Equity refer to the Russell 1000, Russell Midcap, and Russell 2000 indices, respectively. Value refers to companies with lower price-to-book ratios and lower expected growth values, and Growth refers to higher price-to-book ratios and higher forecasted growth values. Real Estate refers to the DJ Equity REIT Total Return Index. Commodities refer to the Bloomberg Commodity Index. US Dollar refers to the value of the United States dollar relative to a broad basket of trade-weighted foreign currencies. Developed: MSCI EAFE; Morgan Stanley Capital International Index that is designed to measure the performance of the developed stock markets of Europe, Australasia, and the Far East. Emerging: MSCI Emerging Markets; Morgan Stanley Capital International Index designed to measure the performance of the emerging stock index of China, Brazil, India, and other emerging market countries.
Diversification does not protect an investor from market risk and does not ensure profit.
This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. Views and opinions expressed are current as of the date of this publication and may be subject to change, they should not be construed as investment advice.