Two Nasdaq records, then a 5.2% yield: Wall Street's week

Two record closes in two days, and by Thursday night the Nasdaq Composite had given both of them back. That is the shape of Wall Street's week: an artificial-intelligence rally that looked unstoppable on Monday morning ran straight into a bond market that would not let it finish.

The numbers through Thursday's close tell a split story. The Nasdaq Composite ended Thursday at 26,939.37, up 1.97% on the week and the clear winner. The S&P 500 finished at 7,704.13, ahead 0.87%. But the Dow Jones Industrial Average closed at 51,349.98 — down 0.83% from the previous Friday, and heading for a fourth consecutive losing week. Three indices, three different weeks.

What separated them was the yield on the 10-year US Treasury note. It began the week easing below 4.95%. By Wednesday it had reached 5.135%, the highest since July 2007, and on Friday it pushed to 5.2% — a level not seen since the global financial crisis. When the risk-free return on government debt moves that far that fast, the most rate-sensitive and most cyclical parts of the market feel it first. That is why the Dow, not the Nasdaq, carried the week's losses.

How the week unfolded

We opened Monday's note Risk-on, and the session justified it. The S&P 500 climbed 1.49% to 7,764.70, the Dow added 366.19 points to 52,048.83, and the Nasdaq surged 2.26% to a record close of 27,122.09. Two forces did the work. Oil retreated despite weekend Houthi strikes on Saudi fuel installations near Riyadh and Yanbu, with WTI crude falling around 3% to $97.09 a barrel; and Treasury Secretary Scott Bessent called weekend trade talks with China "very successful", setting up Thursday's summit between President Trump and President Xi.

By Tuesday we had moved to Cautious, and the market's internals had begun to separate. The Nasdaq took a second straight record close, up 0.45% to 27,244.28, but the S&P 500 finished effectively flat at 7,764.64 and the Dow fell 0.36% to 51,863.69. Only the AI complex was still climbing.

Wednesday broke it. The S&P 500 fell 58.61 points, or 0.8%, to 7,706.03; the Nasdaq dropped 308.24 points, or 1.1%, to 26,936.04; and the Dow shed 352.10 points, or 0.7%, to 51,511.59. The trigger was that 5.135% print on the 10-year, with traders moving to price roughly a 60% chance of another Federal Reserve rate rise next month. Both of the week's records were gone in a single afternoon.

Thursday we logged Risk-off, expecting the Trump–Xi summit to dominate. It dominated the headlines and barely touched the tape: the S&P 500 slipped 1.90 points to 7,704.13, the Nasdaq edged up 3.34 points to 26,939.37, and the Dow fell 161.61 points, or 0.3%, to 51,349.98 — a third straight decline.

On the catalysts we flagged early in the week, the scorecard is mixed. The Trump–Xi summit underdelivered against the build-up our Monday and Wednesday notes gave it. The two sides extended an existing trade truce by two months, through 10 January, and announced nothing comprehensive on tariffs, rare earths or soybean purchases. Markets had spent three sessions positioning for the meeting and were then left with almost nothing to reprice.

The Iran story eased steadily, which is the main reason oil stopped being the week's problem. After Bessent's Tuesday threat to shut Iranian airlines out of the dollar-based financial system, US envoys held roughly three hours of Qatari-mediated talks with Tehran's foreign minister on the sidelines of the UN General Assembly on Wednesday; by Friday, Iran's Abbas Araghchi had floated reopening the Strait of Hormuz and restarting nuclear talks. WTI crude drifted from $97.09 on Monday to around $94 by Friday. And Thursday's initial jobless claims came in at 218,000 against a 225,000 forecast — a firmer labour market than expected, which in this particular week was a reason for yields to rise rather than something to cheer.

Friday's session is still open as we publish. New York does not close until 16:00 ET, which is 21:00 in London. As of Friday afternoon in New York the Dow was up around 0.8%, the S&P 500 around 0.4% and the Nasdaq around 0.5%, with the 10-year yield at 5.2% and Brent crude near $99. Those are intraday levels, not closing levels, and the final hours can move them materially. A Dow gain of that size, if it held to the bell, would end its four-week losing run — but the session has to finish first.

The names that moved it

Monday belonged to semiconductors. Intel jumped 12%, extending a rally tied to a new Micro LED advanced-packaging partnership with AUO Optronics, while AMD added about 10% and crossed $1 trillion in market value. Meta Platforms rose as much as 11% on enthusiasm for its newly unveiled Muse AI agent, and that enthusiasm spread: Micron gained 5% and Sandisk 6.8% on Tuesday, with South Korea's SK Hynix up 7% in Seoul after completing development of its HBM4 high-bandwidth memory chip. You can see the whole chip complex on our screener.

The single biggest corporate story arrived late. Akamai Technologies signed an $11.6bn, seven-year cloud computing agreement with AI developer Anthropic, with scope to expand by a further $9bn and a warrant convertible into roughly 5% of Akamai's stock. The shares jumped more than 20% from Thursday's $110.41 close in after-hours and pre-market trading, and content-delivery peers Fastly and Cloudflare traded higher in sympathy. It is the kind of contract that re-rates a company rather than merely lifting it.

Earnings were thin, as they usually are in the gap between American reporting seasons. US companies report quarterly, and the convention is that a share price responds less to the absolute figure than to whether it clears the analyst consensus — a "beat" or a "miss". AutoZone, which we flagged on Monday as the week's main scheduled release, duly beat: fiscal fourth-quarter earnings of $56.05 a share against $54.08 expected and $48.71 a year earlier, on net sales of $6.6bn and same-store sales growth of 2.7%. Revenue came in slightly light, but the shares still rose around 5%.

Elsewhere, KB Home beat at $1.05 a share against 89 cents expected, even with deliveries and revenue down year-on-year. BlackBerry posted adjusted earnings of 7 cents against a 4-cent forecast. Darden Restaurants was the week's casualty, falling 6.6% in pre-market trading on Thursday after earnings of $2.05 a share landed merely in line and revenue of $3.20bn came in just under the $3.21bn expected — a reminder of how little room a fully valued consumer name has when it only matches expectations.

What to watch next week

• Wednesday 30 September — the end of the third quarter, which brings index rebalancing and portfolio adjustment flows.
• Thursday 1 October — the ISM manufacturing survey for September at 10:00 ET, plus weekly jobless claims at 08:30 ET.
• Friday 2 October — the September employment report, at 08:30 ET (13:30 in London). Given how this week's claims number was received, the payrolls print is the one with the clearest route into the bond market.
• Tuesday 27 and Wednesday 28 October — the next scheduled Federal Reserve policy meeting, with the rate decision at 14:00 ET on the Wednesday. No meeting falls in the coming week, but roughly ten Fed speakers appeared this week and further appearances are expected.
• 10 January — the new expiry date for the US-China trade truce extended at Thursday's summit.