Key Highlights

● Shopify traded solidly higher on Friday afternoon as buyers returned to software stocks, with no company announcement.

● Exchange-traded funds tracking software and Cybersecurity rallied strongly while semiconductor funds slipped, with Microsoft up $12.46 to $535.07.

● Shopify sells tools that let merchants run businesses online, with Revenue from subscriptions and the Volume of goods merchants sell.

● The University of Michigan's October sentiment index fell to 46.3 from 48.1, while Delta said consumer response remains quite strong.

Shopify (NASDAQ:SHOP) traded solidly higher on Friday afternoon as buyers returned to software stocks across the board. No company announcement accompanied the move. Instead, the commerce-platform company rode one of the clearest themes of the session: a sharp rebound in application, cloud and security software after Thursday's selloff.

Shopify sells the tools that let merchants run their businesses online, from small independent storefronts to large consumer brands. Because its revenue comes partly from subscriptions and partly from the volume of goods its merchants sell, the stock tends to trade as a hybrid: part software company, part read on how freely shoppers are spending.

How Thursday's scare set up Friday's bounce

The swing started with a media report on Thursday that OpenAI's annualized revenue was about $50 billion at the end of September, roughly $20 billion below a figure that had circulated in late September. The news hit anything tied to the artificial-intelligence build-out. Nvidia (NASDAQ:NVDA), Oracle (NYSE:ORCL), Broadcom (NASDAQ:AVGO), AMD (NASDAQ:AMD) and CoreWeave (NASDAQ:CRWV) all slid, and the Nasdaq Composite closed sharply lower.

By Friday the mood had shifted. OpenAI was reported to expect annualized revenue of $70 billion or more by year-end, and investors returned to the software names that had been dragged down with the chipmakers. Exchange-traded funds tracking software and cybersecurity rallied strongly, while semiconductor funds slipped. Microsoft (NASDAQ:MSFT) added $12.46 to $535.07, and Palantir (NASDAQ:PLTR) climbed to a record close of $209.05. Shopify fit that rotation as a software Business rather than a chip or data-center stock.

A cautious consumer in the background

The consumer side of Shopify's story was less clear-cut. The University of Michigan's preliminary October consumer sentiment index fell to 46.3 from 48.1 in September, a five-month low and below forecasts. "Frustration over cost-of-living continues to mount," said Joanne Hsu, director of the University of Michigan Surveys of Consumers. Yet other signals pointed the other way. Delta Air Lines (NYSE:DAL), which reported quarterly results on Friday morning, said Demand remained healthy despite a jump in fuel costs. "The consumer response continues to be quite strong," said Delta CEO Ed Bastian. For a company whose fortunes rise and fall with merchants' sales, that tug of war between gloomy sentiment and steady spending will matter in the weeks ahead.

A firmer market with light volume

The broader market helped. The Nasdaq-100 rose 157.34 points to 30,883.15, the Nasdaq Composite gained 172.83 points to 27,366.17 and the S&P 500 added 46.18 points to 7,811.54, about seven points shy of Tuesday's record close. The Dow climbed 423.31 points to 51,654.95. Advancing stocks beat decliners on both the NYSE and Nasdaq, although trading volume was well below its recent average.

Not everyone saw a turning point. "That's why it's a fairly tepid rally," Ross Mayfield, Investment strategy analyst at Baird, said, pointing to swings in sentiment around Iran. The 10-year Treasury Yield stayed near a 24-year high, and the Federal Reserve, which raised rates in September for the first time since 2023, has signaled more tightening may follow.

Retail Sales Data and Bank Card-Spending Remarks Will Show Whether Merchants' Customers Keep Spending

Monday, October 12 is Columbus Day: US stocks trade but the Bond Market is closed. September consumer price data lands on Wednesday, October 14, and Thursday brings producer prices and retail sales, a figure E-commerce investors will study closely. The Fed's next policy meeting is on October 27 and 28. Big banks report from October 13 to 16, offering a read on consumer Credit and card spending.