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Weekly Market Commentary: Large Cap Stocks Struggle as AI Scrutiny Persists
11/02/26
Sunflower Bank Weekly Market Commentary: November 2, 2026
Each week, our Investment Committee analyzes the U.S. stock market and bond market activity and news of the previous week, summarizing their findings into a weekly market update report. The key points of this week's commentary, "Large Cap Stocks Struggle as AI Scrutiny Persists," include:
- Large cap equity indexes fell as scrutiny of the AI trade persisted last week. The S&P 500 declined -0.6%, the Index’s third consecutive weekly decline and sixth in the last eight weeks. Technology stocks were particularly pressured. The Nasdaq 100 fell -2.0% and the Philadelphia Semiconductor Index fell -7%.
- Not all stocks fared poorly. The Russell 2000 increased +1.3% last week and the equal-weight S&P 500 increased +0.8% as selling pressure was concentrated in large technology companies. Investors have been rotating out of tech stocks into other parts of the market in recent weeks. Defensive sectors such as Consumer Staples and Healthcare have been beneficiaries.
- The driver of the decline in AI-related stocks was a series of earnings reports that raised concerns about cash burn. Alphabet stock fell -12% after the company reported negative free cash flow and mentioned that AI queries were eating into Search revenue.