Weekly market review: equities decline, Treasury yield falls and dollar strengthens

The Bank of Israel kept its policy rate unchanged at 3.25% on October 21. The decision came with Israel's 12-month inflation rate at 1.6%, within the 1%-3% target range. In the US, September CPI rose 0.6% for the month and 3.7% over 12 months, while core CPI increased 0.3% monthly and 2.6% annually.

The 10-year US Treasury yield declined from 5.09% on October 16 to 4.96% on October 22, the latest official observation published for the week. That is a 13-basis-point decline in yield to maturity. A lower yield generally supports bond prices, but the yield move is not an investor's realized return, which also depends on purchase price, coupon and duration.

TA-35 closed at 4,124.13, down 2.38% from 4,224.67 on October 16. TA-125 ended at 4,034.99, down 1.38% from 4,091.37. These are close-to-close calculations, not a sum of daily percentage moves.

Declines were concentrated in part among technology shares and reflected weakness in US semiconductor and AI-related stocks. On Friday, the TA-35 fell 1.01% and the TA-125 declined 0.81%. The Bank of Israel's decision to hold rates offered near-term policy clarity but did not change the negative tone in equities at the end of the week.

The S&P 500 fell 0.47% to 7,623.68, while the Nasdaq Composite declined 0.71% to 25,955.34. Nasdaq dropped 2.60% on Thursday alone as corporate results revived concerns about the cost and economic return of large AI infrastructure investments.

Technology losses moderated on Friday, but higher oil prices weighed on the broader market. Brent crude climbed to $116.72 a barrel, and most S&P 500 sectors ended the session lower. The full-week moves were milder than the daily volatility, with the S&P 500 down about half a percent and Nasdaq off roughly 0.7%.

The Bank of Israel representative USD/ILS rate was 3.112 on October 23, compared with 3.089 on October 16. That represents a 0.74% weekly appreciation of the dollar against the shekel. Representative rates are reference points, not transaction quotes.

For an unhedged portfolio, dollar appreciation can soften part of a decline in US indices when performance is measured in shekels. An index return in dollars is therefore not necessarily the return experienced by an Israeli investor.

Weekly changes compare the final trading close with the previous week's final close; month-to-date compares with September 30 and year-to-date with the end of 2025. US index returns are in dollars and exclude dividends. Figures are frozen for this edition.