Tech losses, weak sentiment, and a paralyzed data calendar set the tone as Wall Street braces for another volatile stretch

Investors enter the new trading week navigating a complex mix of valuation concerns, AI-sector turbulence, and the ongoing U.S. government shutdown — now the longest in American history. With official economic data releases halted and confidence slipping, the focus is shifting toward earnings from select tech and entertainment companies and how markets digest deepening political and economic uncertainty.

The Nasdaq Composite logged a 3% decline last week, its worst performance since “Liberation Day,” as steep losses in Nvidia (NVDA) and Palantir (PLTR) dragged the tech-heavy index lower. The S&P 500 fell 1.7%, and the Dow Jones Industrial Average lost 1.3%, as investors pulled back from growth-heavy names that have led the market for much of the year.

This week’s calendar will be notably quiet. The shutdown continues to stall key government data, including the Consumer Price Index (CPI) and Producer Price Index (PPI) reports, leaving traders without the inflation signals that typically guide policy expectations. Meanwhile, consumer confidence has plunged to a three-year low, according to private surveys, while October’s job cuts hit their highest level for that month since 2003 — both signs of the growing drag from Washington’s impasse.

AI Boom Meets Valuation Anxiety

Last week’s sell-off highlighted a growing unease around Big Tech’s soaring valuations, which many analysts say have outpaced earnings potential. The market’s optimism over artificial intelligence — a key driver of 2025’s rally — is colliding with concerns over profit sustainability and circular investment patterns among leading players.

“This is what markets are grappling with — the excitement surrounding how impactful these technologies could be in the future, tempered by the concern that the expectations implied by current valuations are too high,” said Thomas Shipp, head of equity research at LPL Financial.

Nvidia, the world’s most valuable chipmaker, lost more than 7% last week — its steepest weekly drop in over a year. Meta (META) and Microsoft (MSFT) each declined over 4%, while investor sentiment toward the broader AI ecosystem soured amid revelations of intertwined financial commitments among AI firms.

For instance, Nvidia has a $6.3 billion supply deal with CoreWeave (CRWV), a company in which it also holds a 7% equity stake, while it has invested another $2 billion in xAI, Elon Musk’s AI startup and a customer of its hardware. OpenAI — backed by Microsoft — has signed major supply deals with Oracle (ORCL), CoreWeave, and AMD (AMD), further blurring the lines between customer and shareholder.

“These cross-investments could be viewed as confidence in downstream profitability,” Shipp noted, “or as financial scaffolding for unprofitable operations designed to preserve demand for chips.”

Adding to investor caution, Meta’s shares tumbled over 10% in late October after CEO Mark Zuckerberg signaled capital expenditures for AI infrastructure would exceed Wall Street forecasts. Meanwhile, OpenAI CEO Sam Altman referenced “commitments of about $1.4 trillion over eight years” in AI development — an ambitious target that assumes sustained revenue acceleration despite ongoing unprofitability.

“The AI race is both a technological and financial arms race,” said Evelyn Wu, senior strategist at Ardent Global Advisors. “Companies are spending at unprecedented rates to stay ahead — but the market is starting to question whether those bets are economically rational.”

Shutdown Fallout Deepens as Confidence Cracks

Beyond the corporate headlines, the broader macro picture remains clouded by Washington’s fiscal paralysis. The shutdown, which has entered its sixth week, is disrupting federal paychecks, paralyzing data agencies, and freezing billions in government contracts.

Private-sector indicators point to deteriorating sentiment. The University of Michigan’s consumer sentiment index fell sharply in November, reaching its lowest level since 2022, while private payroll trackers suggest a slowdown in hiring momentum. The absence of official inflation and employment data has further reduced market visibility, heightening volatility risks once reporting resumes.

“The lack of data means investors are operating without a compass,” said Nathan Huang, U.S. economist at BMO Capital Markets. “Until the shutdown ends, markets will trade on technicals and psychology rather than fundamentals.”

On the earnings front, attention will turn to a smaller but diverse lineup of reports, including CoreWeave (CRWV), Oklo (OKLO), and Rocket Lab (RKLB) in the tech space, alongside Disney (DIS), Paramount Skydance (PSKY), and Brookfield (BN).

Meanwhile, Yahoo Finance’s Invest 2025 conference — scheduled for Thursday — will offer investors a pulse on sentiment from top executives, including Pfizer CEO Albert Bourla, Starboard Value’s Jeff Smith, and Robinhood CEO Vlad Tenev.

Market Outlook: Testing Sentiment in a Data Vacuum

Analysts say markets may remain range-bound this week, with AI investment risk, valuation fatigue, and shutdown uncertainty forming the three main narratives driving sentiment. While equity pullbacks have been mild relative to earlier corrections this year, the combination of missing data and political gridlock leaves room for further downside.

“Valuations are stretched, liquidity is constrained, and macro visibility is limited,” said Priya Nair, head of global strategy at JP Global Investments. “That’s a volatile mix — and the only certainty in the coming week is uncertainty itself.”

Investors will continue watching bond markets for cues, particularly given last week’s steady 10-year yield near 4.1% and renewed demand in Treasury auctions. But without a clear read on inflation, labor, or fiscal resolution, the near-term bias remains defensive.

“It’s a market that’s pausing, not panicking,” Nair added. “But the patience is wearing thin.”