The earnings flood continued but didn’t change the overall narrative of a strong economy and resilient consumer, which was borne out in this week's GDP report. What it did change was the complexion of the AI narrative after Google reported Wednesday night. Up until then, the S&P 500 was up over 1% for the week with large caps and the AI trade rebounding. Tech and Industrials were the leading sectors. After 3 straight weeks of declines that took it down 20%, the NYSE Semis index was up ~8% and NYSE 100 up over 2%. The Consumer Discretionary vs Staples ratio (equal-weight) was bouncing off its lows of the week prior as investors rotated out of the more defensive pockets of the market. That momentum abruptly changed, however.

Google's earnings disappointed the Street more than Charlie Brown's trick-or-treat stash. The stock dropped 12% for its worst decline ever. Thursday night was the real House of Horrors for tech earnings. INTC fell ~30%. Friday's 2% plunge took the S&P 500 below both its 50 and 100d moving averages and retraced most of the post-Situational Awareness rally at the beginning of August. It did bounce into the Close, however, which is not insignificant. While it was a nightmare for Tech, the rest of the market held up well and the S&P was down less than 1% for the week. If we told you the Tech and Comm Services sectors were down 2% and 9% for the week, respectively, you'd probably take a 1% drop overall for the Index every time. Every sector except those two were higher by at least 1%. The equal-weight was up almost 1% for the week. Healthcare was the big winner. Defensively-oriented Utilities and Consumer Staples also led. Energy rode the commodity gains.

The kids will get an hour longer to sleep off their candy hangover on Sunday as clocks fall back. Next week, we’ll get important updates on the labor market with monthly payrolls, JOLTS and ADP employment reports. ISM Manufacturing and Services, Factory Orders and the latest University of Michigan Sentiment survey will also be on the schedule. Maybe that sentiment report gets a pop if the Wolverines can beat Rutgers. The Treasury will release its next quarterly refunding plans. Rate decisions for the UK, Korea and Australia, Chinese PMIs and European inflation will headline international data. Earnings won’t stop, with Apple, AMD, Pfizer, McDonald’s, Uber and Qualcomm some of the big reports. And of course, Tuesday is election day in the US, and a merciful end to all the ads. Enjoy your weekend. Happy Halloween!