U.S. stocks head for strongest week in months as AI shares rise

U.S. stocks were heading toward their strongest week in months on November 13, with the S&P 500 and Nasdaq Composite each up more than 3%. AI shares and rival chipmakers joined the advance, reversing the direction of recent selling even as investors raised their expectations for Federal Reserve interest-rate increases.

The S&P 500 was on course for its best five-day stretch since early August, The New York Times reported Friday morning. Both major indexes were poised for their first weekly gain in more than a month. Those were week-to-date readings before Friday’s regular trading session, not final weekly results.

The rebound followed weeks of losses tied to concerns that growth in the AI industry was slowing. Those worries had prompted sharp selling in technology companies that helped drive the market higher in recent years. This week, chipmakers competing with Nvidia and AI stocks more broadly were gaining.

Mark Hackett, chief market strategist for Nationwide’s investment management arm, offered an optimistic reading of the recovery. “Once you get through the news-driven sentiment, you can get back to focusing on fundamentals,” he told the Times. He described that shift as something he hoped the market was showing.

Borrowing-rate expectations moved higher, too

The stock rally did not come with an easing in interest-rate expectations. U.S. consumer prices rose faster than expected, pushing Treasury yields higher during the week. The 10-year Treasury yield underpins rates on mortgages, business loans and other debt, connecting the bond-market move to borrowing costs across the economy.

The shorter-term yield is sensitive to changing expectations for Federal Reserve policy. Investors now expected at least 0.75 percentage points of rate increases over the next 12 months, beginning with a quarter-point increase in December. A week earlier, they had anticipated just one quarter-point increase over that entire period.

Beth Hammack, president of the Federal Reserve Bank of Cleveland, argued Thursday that rates needed to rise further to bring inflation down. She warned that otherwise “an inflationary mind-set could start taking hold.” Her remarks underscored the inflation concern accompanying the week’s shift in rate expectations.

For now, the recovery in shares was holding alongside that steeper expected rate path. Stock-index futures pointed to a relatively subdued New York opening Friday, leaving the final session to determine how much of the weekly advance would hold.