Here are 4 forces that drove a tough week for stocks

An important development from the financial markets: It was a tough week for stocks, as investors navigated everything from escalating tensions in the Middle East to key tech earnings reports to healthcare developments. Logging their second straight weekly losses, the S & P 500 slipped 0. 6%, while the tech-heavy Nasdaq fell 2.

Here's a closer look at what drove the trading action. Oil prices are back in the driver's seat Oil spiked for a third week in a row on Iran war uncertainty. benchmark West Texas Intermediate crude jumped more than 8%, while international Brent crude surged nearly 10%.

Economic Details

Oil prices jumped on Monday after President Donald Trump warned that Iran would pay for the deaths of three U. service members "many times over. " They gained momentum throughout the week after Trump threatened again 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, fears that the conflict could spread beyond Iran intensified after Houthi militants claimed attacks on Saudi oil tankers in the Red Sea, sending Brent crude above $100 a barrel for the first time since before the U. and Iran reached an interim ceasefire agreement last month. While oil prices pulled back Friday on hopes of restarted U.

-Iran peace talks, the week's sharp move higher underscored how quickly geopolitical tensions can reshape the market narrative. The surge in crude reignited inflation concerns, pushing the 10-year Treasury yield to its highest level since January 2025. With the Federal Reserve meeting next week, the odds of an interest rate hike went up.

Analyst Views

According to the CME FedWatch tool , the markets are now pricing in a nearly 35% probability of a quarter-point increase in rates, up from just a 13% chance one week ago. Wall Street raises the bar for AI spending Artificial intelligence remained a dominant theme of earnings this week, and investors made one thing clear: They're no longer willing to reward massive spending without seeing a clear path to returns. Club holding Alphabet became the clearest example after reporting Wednesday evening better-than-expected revenue and earnings and Google Cloud growth of 82% year over year.

Shares of the Google parent fell 7% on Thursday, as investors focused on Alphabet's decision to once again increase its capital expenditures (capex) 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 is becoming increasingly skeptical that hyperscalers can continue pouring hundreds of billions of dollars into AI infrastructure without showing a greater financial payoff.

Alphabet was the fourth worst performer in the Club portfolio this week, down 7. Capex levels will be the focus when our three other hyperscalers — Amazon , Meta Platforms , and Microsoft — report next week.

Economists are analysing what the news means for the markets.