Four Down Weeks for the Nasdaq, and Consumer Stocks Quietly Cash In

Dear readers,

The scoreboard for the week looks like a rout. The Nasdaq closed its fourth straight losing week, and the semiconductor index lost about 12 percent. But the money did not leave the market. It moved. Consumer discretionary, communication services and real estate all gained in the S&P 500 while chips and energy took the losses.

The Winners Are Unglamorous, but Well Funded

Within the S&P 500, consumer discretionary gained a good 2.7 percent, communication services a good 2.2 percent and real estate just under 1.9 percent. Technology lost almost 7 percent.

Energy gave up about 12 percent, because WTI crude fell roughly 12 percent over the week to near $90. The equal-weighted S&P 500 set a record high on Wednesday, even though the headline index is down a good 5 percent over the past month.

Walmart, Costco and Coca-Cola embody the shift. Coca-Cola hit a new 52-week high on Thursday and closed Friday just below it at $95.67. The stock is up a good 37 percent year to date. Costco is up about 22 percent and Walmart 13 percent.

Walmart gained roughly 16 percent in the past 30 days alone, though it slipped 1.7 percent on Friday. Its valuation remains ambitious, with a market value near $1 trillion and a price-to-earnings ratio above 40.

Berkshire Hathaway also benefited. Its B shares rose more than 5 percent on the week. The company bought back $9.6 billion of its own stock last quarter and sits on a cash pile of about $360 billion.

The value of its Alphabet stake, meanwhile, fell from $37.8 billion to $30.2 billion. Anyone chasing the rotation purely as a trend is already paying up. The better question is which of these stocks would hold their price if AI names started climbing again.

Tech Is Cheaper Than the Market for the First Time Since 2017

The trigger for the selloff was political. Democrats won both chambers of Congress in the midterms, and investors fear brakes on the construction of AI data centers. One poll found that 76 percent of respondents oppose new data centers in their area. More than 30 percent of the S&P 500 now sits in AI-related stocks. On Thursday the Nasdaq fell 5.5 percent and Nvidia dropped about 9 percent.

That has shifted valuations. The technology sector trades at roughly 17 times expected earnings, below the broader market’s 18 times for the first time since 2017. In October 2025 it stood at 32 times. History offers some comfort.

Since 1990, the S&P 500 was higher three months after a four-week losing streak in 80 percent of cases, with an average gain of 6 percent. After past midterm elections, the index rose in all 20 twelve-month periods.

Friday’s rebound fit that script. Micron gained 5.1 percent to $690, Intel 7.7 percent to $56.28 and Nvidia 2.8 percent to $186.64. Over the past month, though, Micron and Nvidia are still down 37 and 21 percent respectively, and SanDisk is down a good 51 percent. This is no sure thing. Uncertainty over political restrictions persists, and volatility remains high.

AMD: Strong Numbers, but Cash Flow Lags

AMD illustrates the chip sector’s dilemma. The company reported record third-quarter revenue of $13.4 billion, up 45 percent. Data center revenue jumped 97 percent to $8.5 billion.

Should investors sell immediately? Or is it worth buying S&P 500?

For the fourth quarter, AMD guides to roughly $17 billion in revenue, well above the market expectation of about $16.2 billion. Adjusted earnings per share came in at $2.09, or $1.46 under U.S. accounting rules (GAAP).

The cash picture is less flattering. Free cash flow fell 64 percent to $554 million, and inventories rose by $3 billion to $11.5 billion. The gaming segment dropped 40 percent, and for 2027 AMD expects a double-digit decline in PC unit volumes. CEO Lisa Su describes AMD as “Data Center First.”

The stock closed Friday at $449.04 after a sharp rebound but is still down about 30 percent over 30 days. Its record high of $658.52 dates to October 6. The growth is beyond question. But at a price-to-sales multiple of just over 16, the shares need visible cash flow. The next few quarters must show whether inventories come down.

Energy and Inflation: The Rate Question Moves to Europe

Inflation remains the frame around everything else. The OECD reports September inflation of 4.5 percent, driven by energy prices up 17.4 percent. In the euro area, October inflation is 4.0 percent, double the European Central Bank’s target.

ECB President Christine Lagarde expects inflation to stay elevated in the coming quarters. ECB board member Isabel Schnabel considers further rate hikes likely, because the energy shock is spilling over into other goods and services.

The Bank of Canada has already raised its policy rate by 25 basis points to 2.5 percent. In the U.S., the market expects a 25-basis-point hike in December. The DAX fell nearly 2 percent on Friday after marking a year high on Thursday, and it remains above 25,500 points. For German investors the signal is mixed.

Falling oil prices ease inflation for as long as they last. But the ECB has little room to signal relief, and the debate over Lagarde’s succession adds another variable, with Pablo Hernández de Cos and Klaas Knot as the candidates. Euro-area finance ministers are due to discuss candidates on Monday.

Asia’s Chip Stocks: The Pain Sits in Seoul

In Asia, Friday’s selloff hit hardest. The Kospi lost about 6 percent, SK Hynix fell 10 percent and Samsung Electronics 6.4 percent. Over the past month, the Kospi is down a good 26 percent and SK Hynix about 34 percent. The heavy weighting of memory chips makes the market especially sensitive to news about AI spending. Investors in emerging-market ETFs with a large Korea allocation carry that risk too.

The Takeaway

The coming week poses two questions. Will the move into defensive and consumer names hold, or was Friday’s bounce the start of a return to chips? And will the upcoming U.S. inflation data strengthen or weaken the case for a December hike? On Monday, euro-area finance ministers are also due to take up Lagarde’s succession.

Investors with broad diversification need not react. Those betting solely on AI stocks should check their weighting.

I hope you enjoy the rest of your weekend.

Best regards,
The StocksToday.com Editorial