US equities spent the week caught between an AI capex scare and a year-end bull case.
Hyperscaler capex guides from Microsoft and Google landed well below estimates, which bearish researchers called the starting gun on an AI spending slowdown, with widening AI credit spreads, 20-year highs in real rates, and growing reliance on equity issuance. A separate quant view flipped risk-off, flagging the midterms as a negative catalyst and advising a move up in quality. Technical work saw Tesla pivoting at ~404, with downside toward the 230s if it fails to reclaim that level.
Yet the published consensus leaned constructive into year-end. Several analysts argued mega-cap tech sold off too hard, with Alphabet flagged as more than four standard deviations oversold, and growth as a whole washed out versus value. Historical work on post-midterm S&P 500 returns pointed to a tailwind from buybacks, rebalancing, and rising earnings guidance, with one bullish scenario sketching a move toward 8,000–8,100 if the index defends its 100-day. Energy and staples were called crowded and ripe for trimming.