Friday's Final Takeaways: Tech's Tough Week & Market Pricing Fed Rate Hold

Marley Kayden (0:01)

Welcome back to Market On Close. I'm Marley Kayden here in Chicago, alongside Sam Vadas at the New York Stock Exchange. Here's some final thoughts on today's session. The rotation out of tech led to a mostly losing week across our major indices. The chip makers were lower again. The SMH lost more than 10% this week. It was led by declines in Micron, AMD and Sandisk, as the semis really struggled following fears about competition from China's CXMT. This marks the SMH's worst weekly performance we've seen since July. This along with the drops in other AI linked names like the Neo Clouds sent the S&P 500 and the NASDAQ lower on the week. The S&P ended down 2% on the week while the NASDAQ shed 5.5%.

The Dow closed higher on the week, just slightly less than 1%.

And prediction market traders are increasingly betting that Elon Musk could merge Tesla and SpaceX. Cauchy odds have risen to about 58% for a deal before May 1st of 2027 We've been talking all day about Tesla's unveiling of its redesigned Roadster, which features SpaceX developed rocket thrusters, and it's clearly added to the speculation here, along with fresh analyst discussion about the strategic overlap between Musk's businesses. A combination could bring Tesla's AI and robotics ambitions closer to SpaceX's technology and infrastructure, but neither company has confirmed any merger plans. Any deal would face significant questions as well around valuation, governance, and shareholder approval, as well as regulatory scrutiny. But Barclays did say yesterday they expect the announcement before Tesla's December 6th shareholder meeting, so that a vote could be held. All eyes will be on Tesla until then, Sam. But what caught your eye during the session today?

Sam Vadas (1:45)

Certainly that video of that flying car. But on the macro side, a triple dose of inflation this week, the CPI, the PPI, the import prices today, those import prices increased more than expected last month, driven by rising costs for energy and tech goods. Prices were up 8% since a year ago. Imported fuel costs were up nearly 5% for the month. Capital goods rose 0.9%. That was fueled by the prices for products like computers and chips. From a year ago, though, capital goods rose over 8%.

That's the highest since 1987 Imports from China were up 0.7%.

That's the most in five years. What's important about this data is that import prices do not include tariffs and duties. It's another piece of the inflation picture after that hotter than expected consumer and producer prices read, which suggested price increases are broadening out beyond just energy as the Iran war drags out. Markets still expect the Fed, though, to skip a hike at the end of the month with odds for an increase, actually falling below 20% today after looking like a coin flip on Wednesday. And one of the sectors that has really outperformed in the face of these higher prices and also leading up to the holiday season are consumer staples. These stocks caught a bid this week on that big rotation out of riskier tech, as you mentioned, Marley. Walmart has really been a standout. Its investors pile into more reliable, safe havens, like big retailers, it seems. But heading into next week, it's going to be a busy one. What are you going to be looking out for?

Marley Kayden (3:11)

Certainly a busy one. We've got some heavyweight names coming our way. Netflix, meta-platforms, Tesla, international business machines, IBM. We'll also hear from several of the aerospace and defense names. Kevin Greene highlighted RTX reporting, as well as some of the airliners. We've got United and American and Western Digital also reporting they got that price target cut from Wells Fargo today. So a lot of potential movers on that list. But what will you be looking out for, Sam?

Sam Vadas (3:36)

Yeah, let's see what plans out over the weekend as far as some of the expectations of escalation. But we do have a Fed blackout. We won't hear much on that front. Data, we've got manufacturing PMI, University of Michigan Consumer Sentiment, Chinese GDP, a big data dump on Monday, and Jetson Huang will actually be giving a keynote at GTC over in Berlin. So no doubt, all eyes will be on that one to see what he has to say about the AI trade right now.

Marley Kayden (4:00)

Absolutely. Another market moving event on its own whenever he speaks. But that is going to do it for us on Market on Close. For Sam Vadas, I'm Marley Kayden. You can download our Schwab Network app for free in the Apple App Store and you can tune in 24-7 to schwabnetwork.com.

We hope you have a great weekend.