Equities Tricky, Fixed Income Treats During Busy Fed Week

Market volatility and sector dispersion defined the week, as the S&P 500 faced pressure from technology and communication services while utilities and industrials provided a buffer. The Philadelphia Stock Exchange Semiconductor Index (SOX) entered a bear market, falling 27% from its June peak, signaling growing skepticism toward the AI-driven capital expenditure build-out. Fixed income markets rallied across the board, with mortgage-backed securities leading performance as investors sought duration. The Federal Reserve maintained policy rates between 3.75% and 4% during the latest FOMC meeting, emphasizing a commitment to a 2% inflation target despite core PCE running at 3.1%. While Q3 GDP grew at a robust 3.4% and the labor market remains tight with jobless claims near 194,000, real wage growth remains sluggish, forcing households to dip into savings to sustain consumption levels ahead of the upcoming U.S. election.