Week in Review: Higher Rates Weigh on Utilities and Financials as Tech Rises

Markets shifted this week following the Federal Reserve’s interest rate hike and high-level U.S. meetings with Chinese and Iranian officials.

The Dow Jones Industrial Average ($DJI) rose 0.28%, while the S&P 500 Index (SPX) gained 1.21%. The small-cap Russell 2000 Index (RUT) fell 0.8%, while the tech-heavy Nasdaq-100 Index (NDX) jumped 3.25%, and the PHLX Semiconductor Index (/SOX) rallied 6.27%.

Treasury yields moved higher after fresh data pointed to economic strength amid persistent inflation. The 10-year yield continued to climb, settling at 5.184% Friday.

Oil prices fell roughly 2% for the week to about $92.60 a barrel as U.S. and Iran representatives met on the sidelines of the U.N. General Assembly in New York. Energy shipments remain stalled or threatened in Saudi Arabia, Iran, the Strait of Hormuz, and other chokepoints. Analysts focused on the cost to refill declining reserves of refined products globally, from diesel fuel to liquefied natural gas (LNG). See:

• Takeaways in Crude, Trump-Xi Summit & AKAM, Anthropic's $11.6B Deal
• Rachel Ziemba: Markets Pricing In U.S.-Iran Cooldown 'Too Optimistic'
• Jake Hanley Calls U.S. Diesel Export Ban 'Really Bad Idea' Amid Record Pricing

Information Technology led S&P 500 sectors for the week, rising roughly 3%, followed by Communication Services and Health Care. Utilities were the weakest performer of the week, down roughly 4%. Energy, Financials, and Real Estate also moved lower.

Power demand from AI and obstacles to data center construction were front and center Thursday. Oracle (ORCL) issued a force majeure notice to a developer, citing potential delays in securing power for a large AI data center project in New Mexico, Reuters reported. See:

• Surging Yields and Stronger Dollar Test Narrowing Market
• Higher Rates Ding Utilities as Power Investments Gain Traction
• Force Majeure No Issue for ORCL? Cory Johnson's Bullish Contrarian Take

Some small-cap stocks could face pressure from higher interest rates. Roughly 30% of small companies carry variable-rate debt, which means they pay more interest when rates go up, versus 6% of large companies exposed to variable rates, says SlateStone Wealth Chief Equity Strategist Erin Gibbs. See Gibbs: Small Caps Pay Big Price in Rate Hike, 'Don't Underestimate' META Muse

Among technology developments, Qualcomm CFO and COO Akash Palkhiwala, in a Schwab Network interview, discussed Qualcomm’s diversification plan, including efforts to offset declining Apple (APPL) revenue. Qualcomm executives have pointed to data centers as a potential source of growth. See Featured Clips:

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