The S&P 500 Index remained little changed on Friday as indications that the Federal Reserve will hold interest rates steady this month heartened investors. This stability comes despite significant weekly losses driven by rising crude prices and concerns regarding the artificial intelligence trade.

Tech sector volatility

While the benchmark index stayed steady on Friday, the broader market faced a difficult week. The S&P 500 dropped 1.1% on Friday, capping its largest weekly loss since June. Technology stocks faced particular pressure due to doubts about the long-term viability of AI-related investments.

Key market movements included:

  • The Nasdaq 100 Index fell 2.5% on Friday.
  • Tech stocks suffered as shares of CoreWeave Inc. saw a significant decline.
  • The Nasdaq 100 recorded its worst weekly performance since April 2025.

What did Kevin Warsh say?

Federal Reserve Chairman Kevin Warsh provided little guidance on future monetary policy during a discussion at the International Monetary Fund’s annual meetings in Bangkok. He did not dispel market expectations that the central bank will maintain current interest rates during its upcoming meeting at the end of the month.

Warsh noted that the current investment boom, fueled by artificial intelligence, is spreading to other sectors. He stated this trend is lifting economic growth but is also adding to near-term price pressure. Regarding future policy, Warsh said, “I don’t prejudge meetings,” and declined to preview the remaining two policy meetings for 2026.

Economic resilience and inflation

Warsh offered an upbeat view of the U.S. economy, citing business investment as a driver of durability. He defended the central bank's decision last month to raise the benchmark federal funds rate to a range of 3.75% to 4%.

Despite recent data showing hotter consumer and producer prices, many traders believe the Fed will pause in October. This follows recent comments from Fed officials suggesting that while further tightening may be necessary, more economic data is required before taking action.

FAQ

Why did tech stocks fall this week?

Tech stocks were pressured by concerns over the viability of the artificial intelligence trade and a drop in CoreWeave Inc. shares.

What is the Fed's current stance on rates?

Chairman Warsh has declined to provide forward guidance, though markets expect the central bank to hold rates steady in October.