S&P 500: AI-led selloff and earnings resilience – Deutsche Bank

Deutsche Bank reports the S&P 500 at 7377, up 0.31% Friday but down 2.68% on the week, its worst since April 2025. AI-exposed stocks saw heavy losses, while sector rotation favoured Consumers Discretionary and Communications Services. Despite volatility, Deutsche Bank’s asset allocation team finds global and US earnings growth in Q3 remained remarkably strong with record margins.

Index hit by AI slump, earnings strong

"The S&P 500 fell -2.68% (+0.31% Friday), marking its worst weekly performance since April 2025."

"Moreover, the most AI-exposed areas saw even bigger declines, with the Philly semiconductor index down -12.15% (+4.21% Friday), whilst CoreWeave fell another -15.44% (+6.28% Friday)."

"Our asset allocation team have reviewed the global earnings season here and highlighted how growth has remained remarkably strong in Q3 despite a very high hurdle after 38% year-on-year growth in Q2 and persistent upgrades ahead of the reporting season."

"US earnings growth likely held at 34%, with the median company growing 14% and growth excluding Tech, Energy and Materials at 13%, one of the strongest rates since the GFC."

"So although consensus sees some moderation in 2027, the striking feature of this earnings season has been how broad-based the strength remains even against an exceptionally demanding starting point."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)