Chip Rally Fuels Late Recovery as Nasdaq Ends Week in Positive Territory

The major averages staged an afternoon recovery on Friday, allowing the S&P 500 and Nasdaq Composite to erase earlier losses and finish modestly higher. The S&P 500 gained 0.2%, while the Nasdaq advanced 0.4%. The Dow Jones Industrial Average lagged, slipping 0.2%. The improvement followed a weaker first half of the session, when rising Treasury yields and broad selling pressure had pushed the major averages to their session lows.

The recovery was driven primarily by renewed strength in technology and select mega-cap stocks rather than a broad-based improvement in market breadth. Only three of the 11 S&P 500 sectors finished higher, while small- and mid-cap stocks continued to underperform. The Russell 2000 declined 0.5%, and the S&P MidCap 400 fell 0.3%.

That divergence left the Nasdaq Composite as the only major index to finish the week with a gain, reflecting the continued importance of technology leadership even as large portions of the broader market struggled with elevated interest rates.

Semiconductor stocks provided the clearest source of momentum during the afternoon recovery. The PHLX Semiconductor Index surged 2.8%, helping information technology (+0.8%) finish comfortably atop the sector standings.

Memory and storage stocks were particularly strong as investors continued to position around robust AI data-center demand and constrained storage supply. Sandisk (SNDK 1791.82, +177.43, +10.99%) surged nearly 11%, while Seagate Technology (STX 858.79, +55.66, +6.93%) climbed almost 7%.

Coherent (COHR 317.36, +21.38, +7.22%) was another standout and ranked among the session’s best-performing S&P 500 components. The company announced an expansion of its Pluggable Optical Line System portfolio targeting the high-capacity interconnect requirements of cloud and artificial intelligence infrastructure, reinforcing investor enthusiasm around the broader AI networking buildout.

Mega-cap growth stocks provided another important source of support, lifting the Vanguard Mega Cap Growth ETF 0.4%. Amazon (AMZN 253.71, +2.52, +1.00%) was among the notable outperformers and helped consumer discretionary finish unchanged despite weakness across much of the sector.

Industrials (+0.5%) were another of the three sectors to finish higher, while financials (+0.1%) received support from another powerful advance in crypto-related stocks.

Coinbase Global (COIN 194.25, +20.28, +11.66%) surged nearly 12%, while Robinhood Markets (HOOD 119.82, +10.01, +9.12%) jumped more than 9%. Both extended their gains following Thursday’s announcement of the SEC’s “Innovation Exemption,” allowing crypto exchanges to offer tokenized equities, while Bitcoin’s move above $81,000 provided an additional catalyst.

The afternoon recovery came despite renewed upward pressure on Treasury yields. The 10-year Treasury yield rose five basis points to 5.00%, reversing most of Thursday’s decline and leaving the benchmark yield two basis points higher for the week.

Rate-sensitive areas consequently remained under pressure. Utilities (-1.3%) finished at the bottom of the S&P 500 sector standings, while the iShares U.S. Home Construction ETF declined 1.3% as the return of the 10-year yield to the 5% threshold weighed on interest-rate-sensitive stocks.

Materials (-1.1%) were another pronounced laggard. Nucor (NUE 248.38, -16.76, -6.32%) and Steel Dynamics (STLD 235.26, -10.09, -4.11%) remained under pressure following disappointing third-quarter earnings guidance, contributing to the sector’s sizable decline.

Communication services (-0.7%) also finished lower after starting the session on firmer footing. Netflix (NFLX 71.77, -3.54, -4.70%) was a notable drag after Wells Fargo downgraded the stock to Underweight from Equal Weight.

Crude oil provided a more favorable macro influence than Treasury yields. WTI futures fell 1.8% to settle at $100.24 per barrel, leaving crude nearly unchanged for the week. The decline offered some relief after oil’s recent surge above $100 had intensified concerns about inflation, consumer spending, and the outlook for monetary policy.

Friday’s session ultimately featured a meaningful recovery from broad morning weakness, but the improvement remained relatively narrow. Only three S&P 500 sectors advanced, small- and mid-cap stocks continued to lag, and the 10-year Treasury yield returned to the closely watched 5.00% level.

Nevertheless, powerful gains in semiconductors, AI infrastructure-related stocks, and select mega-cap names were enough to pull the S&P 500 and Nasdaq into positive territory by the closing bell. The strength of those groups was particularly important for the Nasdaq, which finished as the only major index to post a gain for the week.

The session reinforced the increasingly divided character of the market: enthusiasm surrounding AI infrastructure and semiconductor demand continues to provide substantial support to technology stocks, while elevated Treasury yields remain a significant obstacle for rate-sensitive and smaller companies. That tug-of-war left the broader market mixed at the end of the week, with technology leadership once again making the difference.

Our FTinvest 11 model portfolio declined 1.57% to close at 935.65, ending the week under renewed selling pressure after two relatively stable sessions. The portfolio remains firmly in correction territory and now stands approximately 14.7% below its all-time closing high of 1,096.33, bringing it close to the September 9 closing level of 939.41 and leaving it well below the 1,000 mark.

FTinvest 11 is now up approximately +0.80% year-to-date, leaving the portfolio only marginally positive for 2026. Today’s decline erased much of the stabilization seen over recent sessions and brought the index back toward the lows reached during September’s sharp selloff. With the year-to-date gain substantially reduced, FTInvest 11 continues to navigate a challenging correction while maintaining its disciplined, value-driven focus on long-term capital appreciation.