U.S. stocks continued its losses on Friday as pressure on mega-cap tech and a steep drop in consumer sentiment kept investors on edge. The Nasdaq Composite (IXIC) fell 1% to 22,854, on pace for its steepest weekly decline since April. The S&P 500 (5rdGSPC) slid 0.5%, while the Dow Jones Industrial Average (DJI) dipped 0.3%.
Friday’s performance capped a volatile week led by fears of an AI-driven bubble, weak macro data, and fallout from the prolonged government shutdown. A negative consumer sentiment reading added to the moody sentiment, suggesting Americans are growing more pessimistic about their finances and the broader economy.
Market Movers:
- Canopy Growth (CGC) +15% – Shares rose after the cannabis producer reported fiscal Q2 results that eased concerns over its ability to continue operations. The company ended the quarter with C$298.1M in cash, exceeding its debt by C$70M, and narrowed its net loss to C$1.6M. Canadian adult-use sales surged nearly 30% year over year, helping offset weakness in international markets and stabilizing margins.
- Affirm (AFRM) +6% – The buy-now-pay-later firm rallied after raising its FY2026 GMV outlook to above $47.5B following a strong quarterly beat. Affirm also lifted its adjusted operating margin forecast to 27.1% and reiterated full-year revenue guidance of roughly 8.4% of GMV, signaling continued profitability momentum despite broader fintech volatility.
- Peloton (PTON) +3% – Shares rose after reporting better-than-feared FQ1 results and hiking its full-year profit forecast. The connected fitness company now expects FY2026 revenue between $2.4B–$2.5B and adjusted EBITDA of up to $475M, supported by expanding margins and lower operating costs.
- Power Solutions International (PSIX) -26% – Shares plunged despite record Q3 results as investors focused on shrinking margins and rising costs. Gross margin fell to 23.9% from 28.9% amid a shift to lower-margin products, while operating expenses jumped 39%. The company still projects 45% sales growth in FY2025, led by strong data center demand.
- Block (SQ) -14% – The parent of Square and Cash App sank after Q3 results showed higher operating expenses despite stronger gross profit. While management raised full-year gross profit guidance to $10.24B, investors focused on the weaker-than-expected earnings and margin compression.
- DraftKings (DKNG) -7% – Shares dropped after the company issued a softer FY2025 revenue forecast of $5.9B–$6.1B, below consensus expectations. DraftKings also trimmed its adjusted EBITDA outlook to $450M–$550M as growth in online sports betting moderates following a strong 2024.
- Tesla (TSLA) -2% – Tesla extended its losses despite shareholder approval of CEO Elon Musk’s $1 trillion compensation plan. The vote, backed by roughly 75% of investors, reaffirmed Musk’s long-term leadership but did little to calm concerns about execution risks in Tesla’s robotaxi and humanoid robot programs.
Tech Stocks Lead the Sell-Off
The “Magnificent Seven” megacaps continued to drag markets lower, with Nvidia, Tesla, and Meta posting steep weekly losses as investors grew wary of stretched valuations. Nvidia shares, down nearly 10% for the week, were hit by concerns over AI overcapacity and policy uncertainty after officials ruled out federal support for AI ventures. Meta also came under pressure following reports of massive volumes of scam ads on its platforms, further denting sentiment around the sector.
Intel was one of the few bright spots, rising on speculation it could partner with Tesla to build chip capacity for autonomous vehicles. But overall, Big Tech’s recent run-up appears to have lost steam as traders rotate out of AI-heavy names amid bubble fears.
Economic Data
Economic data added to the headwinds. The University of Michigan’s consumer sentiment index fell to 50.3, its lowest level since 2022, underscoring the toll of the ongoing government shutdown and stubborn inflation pressures. The decline came a day after private data showed October job cuts hitting their highest level in two decades.
With the Labor Department’s official jobs report delayed for a second month due to the shutdown, markets have been left to rely on private data to gauge labor market conditions—intensifying uncertainty and volatility in recent sessions.
Oil and Gold Move Higher
Oil prices bounced after three days of declines, with West Texas Intermediate futures climbing 0.6% to $59.79 per barrel and Brent crude trading around $63.60. The rebound followed OPEC+’s decision to pause production changes, which traders initially read as bearish. Meanwhile, gold futures hovered near $4,000 an ounce, on track for their best year since 1979 as investors seek safe-haven assets amid rising geopolitical and economic risks.
Looking Ahead
Investors will turn their focus to next week’s corporate earnings from Nvidia and major retailers, which could offer fresh insight into consumer demand and AI spending trends. Markets are also watching for signs that the Federal Reserve could move toward a December rate cut. With volatility rising and confidence waning, the next few sessions will be pivotal in determining whether this pullback marks a healthy reset—or the start of a deeper correction.