đ Weekly Market Recap: Record Highs Hide Growing Cracks Beneath the Surface
AI Stocks Keep Carrying the Market While Inflation, Oil, and Rising Rates Start Pressuring Everything Else
Hello traders and investors,
This was one of those weeks where the headline numbers really didnât tell the full story.
On the surface, things looked relatively calm. The S&P 500 (+0.1%) and Nasdaq Composite (-0.1%) finished basically flat near record territory, while the DJIA (-0.2%) slipped only modestly lower. But underneath those numbers? There was a lot more weakness than most people probably realize.
The Russell 2000 (-2.4%) and S&P Mid Cap 400 (-2.4%) got hit pretty hard as rising Treasury yields, stubborn inflation data, and another sharp move higher in crude oil started putting pressure on the broader market.
At the same time, the market kept leaning heavily on the same names again⌠AI, mega-cap tech, and selective semiconductor plays.
That trade is still alive.
But this week definitely showed signs that the market is becoming more selective and less forgiving beneath the surface.
đ Weekly Market Breakdown
The macro backdrop stayed front and center all week.
Hot CPI and PPI reports reminded investors that inflation is still hanging around longer than the Fed wants to see, and rising oil prices only added fuel to those concerns. Crude oil surged all the way to $105.49 per barrel by Friday as renewed fears surrounding Iran and the Strait of Hormuz pushed energy markets higher.
That immediately translated into higher Treasury yields.
By the end of the week:
The 2-Year Treasury Yield climbed to 4.08%
The 10-Year Treasury Yield jumped to 4.60%
Thatâs important because higher yields continue to pressure rate-sensitive sectors like housing, utilities, real estate, and smaller growth names.
Meanwhile, the marketâs leadership narrowed even further.
The Vanguard Mega Cap Growth ETF gained 4.0% this week while the broader market struggled badly underneath it. That tells you exactly where the money was hiding.
The Information Technology sector (+1.2%) continued providing support, but even there things became more selective as the week progressed.
NVIDIA $NVDA remained the centerpiece of the AI trade once again, while software stocks held up relatively well, with the iShares Expanded Tech-Software ETF gaining 0.7%.
But semiconductors became increasingly volatile throughout the week.
The PHLX Semiconductor Index actually finished DOWN 1.6% for the week after several sharp swings in both directions. Investors continued buying dips in AI names, but there were definitely signs of profit-taking and hesitation creeping into the space as yields kept climbing.
Outside of tech, things got much uglier.
The Consumer Discretionary sector (-3.1%) struggled as rising rates and higher fuel prices pressured spending-sensitive areas of the market.
Real Estate (-2.6%) and Utilities (-2.1%) got hit as yields climbed higher.
Homebuilders were especially weak, with the iShares U.S. Home Construction ETF tumbling 7.0% for the week as mortgage affordability concerns resurfaced.
The Energy sector (+6.8%) was the clear standout as oil prices exploded higher throughout the week.
So while the indexes themselves looked relatively stable, the broader market definitely didnât feel healthy underneath the hood.
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Monday: Semiconductors Start the Week Strong
Monday started relatively constructive.
The S&P 500 (+0.2%), Nasdaq Composite (+0.2%), and DJIA (+0.1%) all finished modestly higher, and it was enough to push the S&P and Nasdaq back to fresh record highs.
Semiconductors led the way early.
The PHLX Semiconductor Index surged 2.3%, helping drive gains in the Information Technology sector (+0.8%).
Lumentum Holdings $LITE exploded 16.52% after news it would join the Nasdaq 100 Index next week, while Coherent $COHR (+13.25%) and Qualcomm $QCOM (+8.42%) rallied after Bloomberg reported executives from both companies were invited on President Trumpâs China trip.
NVIDIA $NVDA added another 1.97%, continuing to act like the heartbeat of the AI trade.
Tesla $TSLA also helped hold the indexes up with a 3.91% gain.
At the same time, oil prices started creeping higher again after President Trump said Iranâs response to the latest U.S. peace proposal was âtotally unacceptableâ and that the ceasefire was on âmassive life support.â
Crude oil jumped 2.8% to $98.07 per barrel.
Meanwhile, Communication Services (-2.3%) was the clear laggard.
Alphabet $GOOG fell 2.59%, Netflix $NFLX dropped 2.33% after legal headlines out of Texas, and The Trade Desk $TTD sank 6.76% following a downgrade from HSBC.
Despite the mixed internals, the market still showed resilience early in the week thanks largely to semiconductors and AI-related momentum.
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Tuesday: Inflation Hits and Yields Surge
Tuesday was one of those sessions that felt like two completely different trading days.
The April CPI report came in hot enough to keep inflation fears alive:
Headline CPI: +0.6%
Core CPI: +0.4%
Year-over-year headline inflation rose to 3.6%
Core inflation increased to 2.8%
That immediately sent Treasury yields and oil prices higher.
Crude oil surged another 4.3% to $102.30 per barrel.
Growth stocks got hit hard early.
The Information Technology sector (-1.0%) came under pressure as the PHLX Semiconductor Index dropped 3.0%.
Qualcomm $QCOM sank 11.46%, Intel $INTC lost 6.82%, and Sandisk $SNDK fell 6.18% after Mondayâs huge rally.
But once again, buyers stepped back into tech later in the session.
NVIDIA $NVDA actually managed to reverse green and finish up 0.67%, helping stabilize the Nasdaq by the afternoon.
Meanwhile, investors rotated aggressively into defensive sectors:
Health Care (+1.9%)
Consumer Staples (+1.6%)
The broader market still showed weakness, but dip buyers were clearly still lurking underneath many of the AI names.
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Wednesday: Hot PPI Gets Ignored as AI Momentum Returns
Wednesday felt like classic 2026 market behavior.
The PPI report came in MUCH hotter than expected:
Headline PPI: +1.4%
Core PPI: +1.0%
Those numbers shouldâve rattled the market harder than they did.
Instead?
Investors basically shrugged it off and went right back into mega-cap AI names.
The Nasdaq Composite surged 1.2% to another record high while the S&P 500 gained 0.6%.
The PHLX Semiconductor Index rebounded 2.6%.
Onsemi $ON jumped 11.14%, and NVIDIA $NVDA rallied another 2.29% after reports Jensen Huang would accompany President Trump to China.
Apple $AAPL also traded to fresh all-time highs.
Communication Services (+2.7%) became one of the strongest sectors thanks to Alphabet $GOOG (+3.97%) and Meta Platforms $META (+2.26%).
At the same time, the equal-weighted indexes lagged badly again.
Thatâs important because it showed leadership continuing to narrow even while the indexes pushed to records.
Money was crowding into fewer and fewer names.
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Thursday: AI Euphoria Takes Over Again
Thursday turned into another full AI momentum session.
The S&P 500 (+0.8%), Nasdaq Composite (+0.9%), and DJIA (+0.8%) all pushed to fresh highs again as enthusiasm around AI infrastructure spending kept driving the market higher.
Cisco Systems $CSCO exploded 13.41% after a strong earnings report and bullish AI-driven guidance.
NVIDIA $NVDA gained another 4.39% after reports the U.S. approved H200 chip sales to several Chinese companies and UBS raised its price target to $275.
The AI IPO frenzy also heated up as Cerebras Systems $CBRS surged 68.15% in its public debut after pricing far above expectations.
Software stocks joined the rally too, with the iShares GS Software ETF climbing 2.3%.
Even though breadth improved somewhat Thursday, there were definitely signs of speculative behavior showing up again in AI-related names.
And whenever valuations start getting stretched while rates are rising at the same time, that becomes something worth paying attention to.
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Friday: Oil and Yields Slam the Market
Friday was ugly.
The market finally felt the pressure from rising oil and yields in a much bigger way.
The S&P 500 fell 1.2%, the Nasdaq Composite dropped 1.5%, and the DJIA lost 1.1%.
Crude oil exploded another 4.3% higher to finish at $105.49 per barrel after fears resurfaced that the U.S. could become more directly involved with Iran again following the Trump/Xi summit.
Treasury yields ripped higher:
2-Year Yield: 4.08%
10-Year Yield: 4.60%
That immediately pressured the AI trade.
The PHLX Semiconductor Index sank 4.0% Friday alone, leaving it negative for the entire week.
NVIDIA $NVDA dropped 4.42%, Micron $MU lost 6.62%, and Corning $GLW fell 7.85%.
Tesla $TSLA also slid 4.79%, pressuring Consumer Discretionary (-1.8%).
Utilities (-2.4%), Materials (-2.7%), Real Estate (-1.6%), and Industrials (-1.8%) all struggled badly as rates and oil climbed together.
The only real winner Friday was Energy (+2.3%).
That session was a reminder that even strong AI momentum can start cracking when yields rise fast enough.
đ§ My Take
This market is still being carried by a relatively small group of mega-cap names and AI enthusiasm.
Thatâs the reality right now.
And while that leadership has been incredibly powerful, this week showed some early warning signs underneath the surface.
The broader market is weakening.
Small caps are struggling.
Rate-sensitive sectors are struggling.
Housing is struggling.
And the market is becoming increasingly dependent on a handful of names continuing to levitate everything higher.
Now to be clear⌠Iâm not calling for some massive collapse here.
The trend is still up.
Dip buyers are still stepping in.
And AI momentum is still attracting serious money.
But this is no longer the broad healthy rally we were seeing earlier in the year.
This is becoming a much more selective market.
For me personally, that means staying patient, staying disciplined, and not getting sucked into chasing extended moves just because the headlines are bullish.
Iâll continue doing what I always do:
Let the setups come to me
Stay systematic
Focus on probability
Manage risk
And keep the wheel turning
Because when markets start narrowing out like this, discipline matters even more.
If you found this wrap-up useful, I also provide a full premarket briefing every morning along with a Closing Bell recap at the end of each trading day on Substack Notes.
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And stay tuned for further updates on Substack Notes as this market continues to evolve.
*Disclaimer: The examples in The Options Oracle are my opinion, not financial advice.