Friday’s drops for AI superstars continue a jagged return toward Earth after they earlier had been the main engine lifting Wall Street higher. Other stocks that used to struggle with uncertainty about the U.S. economy’s strength and what the Federal Reserve will do with interest rates, meanwhile, have been doing better.
The stocks in the Dow Jones Industrial Average, which has much less of an emphasis on tech, rose 1 per cent this past week. That’s much better than the Nasdaq composite’s drop of 1.6 per cent.
Notwithstanding Friday’s rise in yields, investors have been feeling more optimistic about interest rates. The Fed earlier this week cut its main interest rate for the third time this year and indicated another cut may be ahead in 2026.
Wall Street loves lower rates because they can boost the economy and send prices for investments higher, even if they potentially make inflation worse.
The Fed’s chair, Jerome Powell, did hint on Wednesday that interest rates may be on hold for a while. But he helped soothe nerves when his comments appeared less harsh than some investors expected in shutting off the possibility of more cuts in 2026.
Stocks of companies that depend on spending by U.S. consumers were relatively strong Friday, as two out of every five stocks within the S&P 500 rose. Oil prices eased this week, which could help ease people’s bills, and hopes are rising that easier interest rates will help support spending.
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Chipotle Mexican Grill rose 3.6 per cent, McDonald’s climbed 2.3 per cent and Norwegian Cruise Line added 1.5 per cent.
The biggest gain in the S&P 500 came from Lululemon Athletica, which jumped 9.6 per cent after reporting better profit and revenue for the three months through Nov. 2 than analysts expected. It also said its CEO, Calvin McDonald, plans to step down at the end of January following pressure to boost revenue.
All told, the S&P 500 fell 73.59 points to 6,827.41. The Dow Jones Industrial Average dropped 245.96 to 48,458.05, and the Nasdaq composite slumped 398.69 to 23,195.17.
In stock markets abroad, indexes fell modestly in Europe following a stronger finish in Asia.
Stocks jumped 1.7 per cent in Hong Kong and rose 1.4 per cent in Tokyo for two of the world’s bigger gains.
AP
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