S&P 500 Gains 0.59% As Oil Stays High And Consumer Sentiment Falls

The S&P 500 (SPY) climbed 0.59% on Friday, ending the week higher after a Thursday decline driven by artificial intelligence sector concerns. The tech-heavy Nasdaq Composite rose 0.64%, while the Dow Jones Industrial Average outperformed both benchmarks with an 0.83% increase.

Energy markets remained elevated despite President Donald Trump's statement that Russian President Vladimir Putin agreed to supply diesel to the United States and global markets. This move was intended to address supply crunches stemming from the war in the Middle East. Concurrently, Iran announced it will escalate hostilities in the Strait of Hormuz as prospects for an agreement with the U.S. remain elusive. The Iranian Revolutionary Guard Corps stated in a release that it will now pursue vessels that do not transit its approved routes, even outside the waterway and throughout the entire region, adding that its punishment will be definitive.

Technology shares rebounded following Thursday's drop, which followed reports that OpenAI's annualized revenue hit $50 billion at the end of last month, a figure lower than the $68 billion previously reported. A separate report detailed on Friday indicated the company expects that figure to reach $70 billion by the end of the year, representing a 40% increase over September. OpenAI shared these figures with investors as part of its latest fundraising effort. Bloomberg reported that the company is seeking to raise at least $30 billion at a $1.4 trillion valuation. This follows a $122 billion raise in March at an $852 billion valuation, which included that funding.

Consumer sentiment fell to a five-month low in October, according to the University of Michigan Survey of Consumers. The index stood at 46.3, down from 48.1 in the previous month and 13.6% below the level recorded in October of the prior year. Joanne Hsu, director of the survey, noted in a statement that buying conditions for durables plummeted amid high prices and borrowing costs.

Hsu observed that increases in sentiment among Democrats and Republicans were offset by a decline among independents. She added that sentiment for lower-income consumers and those with smaller stock portfolios dropped steeply, as these groups have fewer resources to weather price increases. Frustration over the cost of living continues to mount, with consumers across the political spectrum believing the economic trajectory has weakened since the beginning of the year.

Year-ahead inflation expectations increased by 0.1 percentage points, rising from 4.6% to 4.7%. Hsu stated that this current reading substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all readings from 2024. Long-run inflation expectations also stepped up from 3.4% in September to 3.5%, a level notably higher than their 2024 range of 2.8% to 3.2%.