Week in Review: Bulls and Bears Battle as Tech Selloff Permeates Sectors

It was a brutal week for tech investors, and a volatile one for broader indexes, as midterm elections became a factor in an AI-related seesaw selloff.

To end the week, the Nasdaq-100 (NDX) fell 4.9%. The PHLX Semiconductor Index (SOX) slumped 12%. The Dow Jones Industrial Average ($DJI) held up relatively well, off by 0.94%. The small cap Russell 2000 (RUT) declined by just more than 2%.

The S&P 500 (SPX) was down 2.7%, though sectors told a more nuanced story. SPX consumer discretionary stocks, up 2.68%, fared best for the week, followed by communication services (up 2.26%), real estate (up 1.88%) and financials (up 1%). But the SPX energy sector saw the heaviest downdraft, off by nearly 12%, followed by the information tech sector, down nearly 7%. The week's sleeper story was the steep drop in oil prices, with U.S. WTI crude down 12% to near $90 per barrel in Friday afternoon trading. 

The CBOE Market Volatility Index (VIX) spiked for the week, and closed Friday at a still-elevated level near 25.64. With shorter-dated protection priced above longer-dated volatility, VIX contracts suggest investors may be paying a premium to hedge near-term risk despite Friday’s rebound.

Here are some highlights with market insights from discussions last week:

With election results in, Nick Giorgi, chief equity strategist at Alpine Macro, said sell the rumor, buy the news seemed to be the order of the day Wednesday, as the market rallied after midterm elections. With ballot questions on data center expansion, might the AI buildout and related demand for chips, cloud, memory, and more, cool off? He discusses what is driving "Not in My Backyard" data center construction sentiment even though big tech companies are investing in America. Looking to portfolio diversification, Giorgi weighs in on healthcare investments, fuel prices and the energy sector. See Nick Giorgi Calls Midterm Election Results 'Clearing Event' for Stock Market

William Lee, chief economist at Global Economic Advisors, says post-midterm fears about the AI infrastructure buildout may be misplaced, since state leaders, who want to create jobs, have more say than Congress or the U.S. president. He discusses data center electricity and water demand, and construction permitting, GE Vernova (GEV), and Palantir (PLTR). See Lee: Sell-Off Focused on Wrong Part of Government as AI Data Center 'Battle' Brews

Then came Thursday, and a steep dive not only in the AI trade, but across markets. By the end of the day Thursday, all S&P 500 sectors were down, though the damage was steepest in information technology. Bulls talked about an AI trade overreaction, and the calm mindset traders and investors need when considering one day of returns on a longer timeline. But as markets found their footing Friday, bears asked if buying the dip represented a "dead cat bounce" with AI fundamentals in question. See

·        SPX & NDX Sell-Off a Buy Opportunity? Why Steven Orr is Bullish

·        Lloyd: AI Has 'Win-Win' Scenario Post-Midterms; SPCX, TSLA Merger Still Possible

·        Stock Market Recovery True Bullish Momentum, or Next Dead Cat Bounce?

What to think about this weekend? Football may heal wounds. The co-founder and CEO of DraftKings (DKNG), Jason Robins, said Friday that he thinks prediction markets could eventually become as large or larger than DraftKings' core business. He talked about the rapid expansion of prediction markets, the impact of fantasy sports on sportsbooks and iGaming growth, NFL betting activity, and more. DraftKings shares fell 21% Friday and are down 46% year to date. See DraftKings (DKNG) CEO: Prediction Markets Will Bigger Than Sports Betting Business

For more on the week's market volatility, watch videos with Schwab Network market insights on technology.

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