The market finished lower in a volatile week that underscored the investors’ uneasy relationship with AI disruption concerns, and still sticky inflation. The S&P 500 (-0.4%) slipped back below its 50-day moving average, while the Nasdaq Composite (-1.0%) and Dow Jones (-1.3%) also posted weekly losses. Small- and mid-cap stocks did not provide shelter, with the Russell 2000 (-1.2%) and S&P Mid Cap 400 (-0.9%) finishing firmly lower. The week began with a sharp “risk-off” tone tied to renewed tariff uncertainty and intensifying AI-disruption fears, particularly across software and financials. Early weakness in mega-caps and asset managers set the tone, and although dip-buying efforts midweek briefly restored things, the rebound ultimately did not hold
A major data point for the week came from NVIDIA’s earnings report. Despite delivering another stellar report highlighted by record data center revenue and strong guidance, the stock fell sharply and ended the week down 6.7%. The negative response reinforced lingering concerns about valuation and the sustainability of hyperscaler capex tied to the AI buildout. That negativity spilled over into other chipmakers and weighed on the broader information technology sector (-2.2%), while the Vanguard Mega Cap Growth ETF (-0.9%) also retreated.
Financials (-2.0%) were another area of notable weakness. Early-week pressure tied to AI-related uncertainty and private equity exposure resurfaced late in the week after a hotter-than-expected inflation print pushed out rate-cut expectations. The January Producer Price Index rose 0.5% (consensus 0.3%), while core PPI increased 0.8% (consensus 0.3%), reinforcing the notion that inflation pressures remain sticky. The data undercut enthusiasm for rate-sensitive sectors.
In contrast to tech and financials, defensive sectors stood out. Utilities (+2.9%), consumer staples (+2.7%), and health care (+2.1%) attracted steady rotational flows, while energy (+2.0%) benefitted from a rebound in crude prices. Oil experienced a volatile week amid tensions between the U.S. and Iran, with escalations over the weekend likely to keep geopolitical risk in focus.