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Big Tech Slips, Small Caps Rise | Weekly Market Review · Oct 26–30, 2026

U.S. stocks, the macro backdrop, liquidity, the Fed and business implications from Amazon, Intel and Chevron. Recorded review of October 26–30, 2026.

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Episode transcript

The week in one question

A strong economy. A cautious Fed. And a sharp technology selloff. This week, investors asked whether returns on AI investment can justify the scale of spending. I’m Kylie Young. Here is your Newstock weekly review for October twenty-sixth through thirtieth.

What the indexes actually did

For the week, the S and P five hundred lost zero point six percent, the Dow fell zero point nine percent, and the Nasdaq dropped two percent. Small-cap stocks held up better: the Russell two thousand gained one point three percent. Friday’s selloff was sharper than the weekly figures suggest: the Nasdaq fell two point nine percent in that session alone. Our read: technology stocks bore the brunt of the selling, while small caps finished the week higher.

Growth and inflation

The macro backdrop helps explain the Fed’s cautious stance. Real GDP grew at an annualized rate of three point four percent in the third quarter. Headline PCE inflation was three point six percent year over year in September. Core PCE inflation, which excludes food and energy, was three point one percent. Resilient growth and persistent inflation leave the Fed with limited room to ease.

The liquidity plumbing

The liquidity data also deserve attention. For the week ended October twenty-eighth, average reserve balances at the Fed fell by about sixty-nine billion dollars. The average balance in the Treasury General Account rose by about forty-eight billion. An increase in that account drains reserves from the banking system, all else equal. Reserve balances are one part of the liquidity picture. Separately, the ten-year Treasury yield eased from five percent on the previous Friday to four point nine eight percent by Thursday. Read the two together: reserve balances track funds that banks hold at the Fed, while Treasury yields help gauge longer-term financing costs.

The Fed’s actual decision

The Fed left the federal funds target range unchanged at three point seven five to four percent. Two policymakers dissented in favor of a quarter-point rate hike. Our takeaway: borrowing costs remain a headwind, especially for companies whose valuations depend on earnings further out.

Three business implications

Three earnings reports show how the effects can spread across businesses. AWS revenue rose about thirty-nine percent year over year. Amazon reported a free cash outflow of forty-two point four billion dollars over the trailing twelve months. For Amazon, the question is how that spending translates into future cash flow. For chipmakers, networking equipment vendors and power suppliers, watch how capital spending turns into orders, shipments and cash receipts. Intel reported twenty-one percent year-over-year revenue growth and issued fourth-quarter revenue guidance of fifteen to sixteen billion dollars. Its shares plunged almost twenty-nine percent Friday. Our view: competitors could gain market share, while equipment suppliers will be watching Intel’s capital-spending plans and order timing. Softer industry demand could limit the benefit to rivals. Chevron reported nine point nine billion dollars in quarterly earnings. Energy is a useful contrast: look at current production and cash generation alongside the technology sector’s expected future growth. For oilfield services companies, watch whether that cash generation leads to new project approvals and service orders.

Next week and closing

Next week brings the November third midterm elections and the November sixth jobs report. Watch policy expectations, funding conditions and company cash generation together. The views in this program are for general information, not personal investment advice. I’m Kylie Young. Thank you for watching Newstock.

Sources

AI presenter: Kylie Young. Recorded news and analysis for research and education.