Stocks logged a second straight weekly loss, with the S&P 500 slipping 0.6% and the Nasdaq falling 2.1% as investors navigated escalating Middle East tensions, key tech earnings, and healthcare developments. Oil prices, AI spending scrutiny, mixed data center earnings, and pharmaceutical breakthroughs drove the trading action. The moves reflected heightened geopolitical risk and shifting investor expectations around artificial intelligence returns.
Oil Prices Surge on Middle East Tensions
Oil spiked for a third consecutive week on Iran war uncertainty. U.S. benchmark West Texas Intermediate crude jumped more than 8%, while international Brent crude surged nearly 10%. Prices rose on Monday after President Donald Trump warned that Iran would pay for the deaths of three U.S. service members "many times over." Trump later threatened to bomb Iranian bridges and power plants, and Secretary of State Marco Rubio said Tehran was not serious about reaching a deal to end the fighting. By Thursday, Brent crude climbed above $100 a barrel for the first time since before the U.S. and Iran reached an interim ceasefire agreement last month, after Houthi militants claimed attacks on Saudi oil tankers in the Red Sea. Oil prices pulled back Friday on hopes of restarted U.S.-Iran peace talks. The surge in crude pushed the 10-year Treasury yield to its highest level since January 2025. According to the CME FedWatch tool, markets are now pricing in a nearly 35% probability of a quarter-point interest rate increase at the Federal Reserve meeting next week, up from just a 13% chance one week ago.
Tech Giants Face AI Spending Scrutiny
Alphabet reported better-than-expected revenue and earnings Wednesday evening, with Google Cloud growth of 82% year over year. Shares of the Google parent fell 7% on Thursday as investors focused on the company's decision to increase its capital expenditures outlook. Management now expects to spend between $195 billion and $205 billion on capital expenditures this year and signaled spending will rise again in 2027. With free cash flow turning negative, Wall Street showed increasing skepticism toward continued AI infrastructure investment without greater financial payoff. Intel delivered its strongest quarterly revenue growth since 2011 Thursday night, fueled by a 59% jump in data center revenue. On Tuesday, Intel announced cybersecurity company Fortinet as its first named foundry customer. Intel opened higher Friday but reversed lower, closing down nearly 8%.
Data Center-Exposed Companies Report Mixed Results
GE Vernova shares fell roughly 8% on Wednesday after the company missed Wall Street's earnings-per-share estimate. Order growth surged 88%, driven by strong demand across the firm's Power and Electrification businesses, which are key to running AI data centers. Shares of GE Vernova rebounded 4.7% on Thursday but fell 1.6% on Friday, ending the week down roughly 4.1%. Dover shares dropped almost 8% on Thursday after delivering a mixed quarter, with earnings narrowly topping expectations but revenue falling short. The industrial firm has meaningful exposure to AI data centers, but those businesses account for only about 25% of expected 2026 revenue. Shares of Dover rebounded 2.2% on Friday but finished the week down 5.6%.
Eli Lilly and Johnson & Johnson Deliver Healthcare Catalysts
Eli Lilly announced late-stage data for its next-generation obesity drug, triple-acting retatrutide, on Thursday. Shares rose 2%. The therapy has demonstrated greater weight loss than Lilly's own Zepbound and Novo Nordisk's Wegovy. The company intends to submit retatrutide as a biologic in the first quarter of 2027 rather than using the traditional new drug pathway. The biologic route generally provides stronger intellectual property protections and exempts the drug from Medicare price negotiations under the Inflation Reduction Act. Shares of Lilly gained 1.4% for the week. Johnson & Johnson received FDA approval for its Ottava robotic surgery system on Wednesday, months earlier than investors expected. Shares rose 2% on the news. The approval gives J&J a foothold in the robotic surgery market, long dominated by Intuitive Surgical. J&J stock finished 4.1% higher for the week.
FAQ
What caused oil prices to surge this week?
Oil prices spiked for a third consecutive week on Iran war uncertainty. President Donald Trump warned Iran would pay for the deaths of three U.S. service members "many times over" and later threatened to bomb Iranian bridges and power plants. Secretary of State Marco Rubio said Tehran was not serious about reaching a deal to end the fighting. By Thursday, Brent crude climbed above $100 a barrel after Houthi militants claimed attacks on Saudi oil tankers in the Red Sea.
Why did Alphabet shares fall after reporting strong earnings?
Alphabet reported better-than-expected revenue and earnings Wednesday evening, with Google Cloud growth of 82% year over year. Shares fell 7% on Thursday as investors focused on the company's decision to increase its capital expenditures outlook to between $195 billion and $205 billion this year, with spending signaled to rise again in 2027. With free cash flow turning negative, Wall Street showed increasing skepticism toward continued AI infrastructure investment without greater financial payoff.
What healthcare developments occurred this week?
Eli Lilly announced late-stage data for its next-generation obesity drug, triple-acting retatrutide, on Thursday, with shares rising 2%. The company intends to submit retatrutide as a biologic in the first quarter of 2027. Johnson & Johnson received FDA approval for its Ottava robotic surgery system on Wednesday, months earlier than investors expected, with shares rising 2% on the news.
