Wall Street closed higher on Friday, lifted by Microsoft and artificial intelligence stocks while traders weighed hot business activity data, rising Treasury yields, and Brent crude hovering above $100 a barrel amid escalating Middle East tensions.
U.S. stocks finished the week in positive territory, capping a volatile stretch shaped by shifting expectations around artificial intelligence, sticky borrowing costs, and energy market turbulence. The S&P 500 climbed 0.51% to close at 7,743.41 points according to Reuters data, while the Nasdaq advanced 0.48% to 27,068.72 points. The Dow Jones Industrial Average led the major indexes with a 0.93% gain, ending the session at 51,828.62 points.
Gains in the S&P 500 and Nasdaq capped a volatile week driven by uncertainty about what industries will win and lose from artificial intelligence, and by concerns about the US war with Iran and a surge in US Treasury yields.
Technology heavyweights provided the primary muscle for the late-week rebound. Microsoft (MSFT.O) rallied 3.7%, lifting its 2026 gain to 7%, after the software giant unveiled several new capabilities in its Copilot app, including a coding tool and an always-on AI agent. Chip maker Qualcomm (QCOM.O) gained 4% and Dell (DELL.N) advanced 5%. Akamai Technologies (AKAM.O) rallied 3.2% after an $11.6 billion cloud services deal with AI leader Anthropic. The deal includes a warrant that could give Anthropic up to 5% of Akamai.
Not all tech shares shared in the rally. Meta Platforms (META.O) dipped 3.3%. The social media company’s stock soared about 13% this week amid a strong reception to its Muse AI agent, which analysts say could benefit tech infrastructure stocks, while challenging banks, online shopping platforms and other consumer businesses.
Energy Markets and Borrowing Costs Keep Inflation in Focus
Beneath the equity gains, commodity and bond markets reflected lingering anxiety over global energy supplies and monetary policy. Oil prices extended their advance on Thursday as escalating attacks between the U.S. and Iran risked prolonging disruptions to energy flows in the Middle East. Brent crude rose above $103 a barrel, while WTI crude climbed above $99 a barrel. A senior Iranian official said on Wednesday that Tehran has no plans to back down in the face of an American naval blockade and will intensify its strikes if the U.S. continues attacking its territory. Also, Iran’s Islamic Revolutionary Guard warned on Wednesday of additional restrictions on shipping around the Strait of Hormuz. Meanwhile, U.S. President Donald Trump said the war with Iran would not end until after the November midterm elections.
Treasuries fell across the curve on Thursday as rising oil prices fueled inflation concerns. The 10-year T-note yield rose four basis points to 4.88%. Bond traders are now awaiting a $22 billion auction of 30-year bonds and the Treasury’s $6 billion buyback auction of 10- and 20-year debt.
Economic data released concurrently showed domestic growth running hotter than anticipated. The S&P Global US Manufacturing PMI hit 57.0 in September and the Services PMI climbed to 58.7, both signaling strong business activity and more hiring. The catch is that companies also reported higher input costs and selling prices, which hints at sticky inflation. At the same time, the average 30 year mortgage rate has moved to 7.12%, which keeps housing under strain.
Sector Divergence and Weekly Market Performance
The broader market’s weekly tally reflected selective buying among resilient sectors alongside sharp pullbacks in rate-sensitive industries. Seven of the 11 S&P 500 sector indexes rose, led by information technology (.SPLRCT), up 0.91%, followed by a 0.6% gain in industrials (.SPLRCI). The S&P 500 gained 1.2% for the week, while the Nasdaq rose 2% for the week after it notched a record-high close on Tuesday.
The S&P 500 this week has traded just under 19 times expected earnings, its lowest valuation since 2023, according to LSEG data. AI-related heavyweights are responsible for much of the performance.
At the same time, high borrowing costs weighed heavily on housing and consumer-facing equities. First Solar (FSLR) fell 10.32%. TD SYNNEX (SNX) declined 9.87% despite reporting stronger earnings and updating guidance, dividend, and buyback activity. Arm Holdings (ARM) dropped 7.88% as traders reacted to SoftBank’s larger Arm backed margin loan used for AI bets.