The S&P 500 closed Friday at 7377, up 0.31 percent on the day but down 2.68 percent for the week, its sharpest weekly decline since April 2025. The selloff was concentrated in the stocks that had driven the index higher all year, with the Philadelphia Semiconductor Index dropping 12.15 percent over the same five sessions and CoreWeave shedding another 15.44 percent. A late-session bounce on Friday trimmed some of the damage but did not change the weekly trajectory.
Earnings strength contrasts with price action
While the index was breaking down, Deutsche Bank’s asset allocation team noted that third-quarter earnings growth remained remarkably resilient. U.S. earnings growth likely held at 34 percent year-over-year, down only modestly from the 38 percent pace recorded in the second quarter. The median company grew profits 14 percent, and stripping out the Technology, Energy and Materials sectors still left a 13 percent growth rate, one of the strongest readings since the global financial crisis.
Breadth of growth survives a high hurdle
The bank highlighted that the strength was broad-based despite an exceptionally demanding starting point. Consensus estimates had been upgraded persistently ahead of the reporting season, raising the bar further, yet companies cleared it across a wider swath of the market than the narrow AI leadership would suggest. Sector rotation last week favored Consumer Discretionary and Communication Services, areas that have lagged the semiconductor rally for months.
Forward estimates still see moderation
Analysts continue to project a deceleration in 2027, but the striking feature of this season has been how little the high base has dented actual results so far. The disconnect between robust fundamentals and violent price action in the AI complex suggests the market is repricing duration and concentration risk rather than questioning the earnings trajectory itself.