Goldman Sachs sees US stocks dip on tech earnings and macro shifts

US stocks traded lower Friday and remained on track for a modest weekly decline as investors digested earnings reports from major technology companies, ongoing credit market volatility, and conflicting macroeconomic signals including rising oil prices and falling interest rates.

The semiconductor sector and chip equipment manufacturers fell double digits in October as debate continued around the sustainability of artificial intelligence infrastructure investment. Microsoft (NASDAQ:MSFT) stock rose during the month, Amazon (NASDAQ:AMZN) remained flat, and Alphabet (NASDAQ:GOOGL) declined despite weakness in AI-related suppliers.

Front-month Brent crude oil prices climbed approximately 6% this week to $117 per barrel, reaching levels near wartime highs stemming from the US-Iran War. The 10-year Treasury yield dropped below 5% for the first time since the Federal Reserve raised rates in September, with rising oil prices now triggering growth concerns rather than inflation fears.

Goldman Sachs forecasts one additional rate hike at the December Federal Open Market Committee meeting with risk that no further increases prove necessary. The firm’s analysis indicates current inflation remains temporary and transitory, according to research released this week.

Major technology earnings reports are scheduled for next week from Amazon, Alphabet, and Microsoft. The third-quarter earnings season targets 27% year-over-year growth for S&P 500 (INDEX:SPX) earnings per share and 9% for the median stock. The midterm elections are scheduled for Tuesday, November 3.