The final week of October exposed a growing divide between markets that benefited from broader regional strength and those vulnerable to renewed scrutiny of artificial-intelligence spending. The Nasdaq Composite lost 2.00%, while the Russell 2000 gained 1.29%, illustrating a shift in relative performance away from large technology companies. Friday’s sharp US selloff, following concerns over corporate AI investment and disappointing results from key technology names, became the defining event of the week.

US Markets Face Renewed Pressure on AI Valuations

Wall Street ended the five-day period unevenly. The Nasdaq Composite fell 2.00%, the S&P 500 declined 0.57%, and the Dow Jones Industrial Average lost 0.85%. In contrast, the Russell 2000 advanced 1.29%, suggesting that smaller US companies showed greater resilience than the largest listed technology businesses. The US Dollar Index was broadly unchanged, recording a 0.00% five-day movement.

The pressure intensified on Friday as investors questioned whether substantial AI infrastructure commitments would generate sufficient returns. Intel suffered a severe decline after its earnings outlook disappointed, while weakness in major technology shares dragged the Nasdaq lower. The semiconductor index also recorded a substantial fall, reinforcing concerns that enthusiasm around AI-related growth may have moved ahead of near-term earnings visibility. The Russell’s weekly gain suggests that the selloff was not uniform across the equity market, although it does not establish a lasting change in leadership.

European Markets Advance as Asian Performance Diverges

European benchmarks posted gains over the period. Germany’s DAX rose 2.53%, France’s CAC 40 gained 2.40%, MSCI Europe advanced 0.83%, and the UK’s FTSE 100 increased 0.37%. The positive weekly performance indicates that European equities maintained resilience despite uncertainty surrounding global technology valuations and energy costs. However, Friday’s broader risk reduction remained an important reminder that regional gains could still be exposed to developments in US markets.

Asia delivered a mixed but generally positive performance. South Korea’s KOSPI climbed 4.78%, Japan’s Nikkei 225 gained 1.77%, and Hong Kong’s Hang Seng Index advanced 0.87%. China’s SSE Composite was the exception, falling 2.48%. The KOSPI’s weekly gain is particularly notable because it came despite a steep decline on Friday, when the index lost 3.48%. This indicates that earlier advances outweighed the final-session setback. The contrast between regional markets also highlights how different sector exposures and investor expectations shaped performance.

Israeli Equities Decline Amid Broad Sector Weakness

Israel underperformed most of the major international benchmarks in the supplied data. The TA-35 fell 2.58%, while the broader TA-125 declined 1.86%. The weakness was especially visible toward the end of the week. On Friday, the TA-35 dropped 2.06%, while the TA-125 lost 1.86% on the day.

Sector performance provides a clearer explanation of the domestic pressure. Insurance, financial services and real estate shares led Friday’s declines, while technology stocks also weakened significantly. Camtek, Tower Semiconductor and Nova recorded substantial losses. The broad number of declining shares indicated that selling extended beyond a small group of companies. Political uncertainty following the inconclusive election added another layer of concern, although it should be considered alongside the wider global technology selloff rather than treated as the sole explanation.

Central Bank Decisions and Earnings Set the November Outlook

Attention now turns to whether corporate earnings can restore confidence in technology valuations and whether central bank policy can accommodate persistent inflation risks. The Federal Reserve’s decision to maintain its policy rate, alongside the latest US growth and inflation readings, will shape expectations for the next phase of monetary policy. Investors will also assess whether the heavy spending commitments of major technology companies translate into measurable revenue growth and sustainable cash generation. For Israel, the durability of the post-election adjustment and the performance of financial, property and technology shares will remain important indicators. The key test entering November is whether earnings fundamentals can stabilize markets after a week in which confidence in AI-related valuations came under renewed pressure.