Last week was definitely, well, bad for the markets, as it broke its phenomenal rally streak that had been running for several weeks. The main culprit behind this grumpy mood was a concentrated and significant technical correction that hit the AI. I said the bubble burst last week but this bubble is taking a while to burst. AI was carrying the market throughout the last few weeks, and as soon as it faltered. the market came crumbling down like sand. This massive sell-off drove the Nasdaq down over 3%, which was its worst weekly performance in months, and the S&P 500 and the Dow Jones Industrial Average also finished the week way lower, showing how bad the market is feeling right now.
A huge source of anxiety for investors was the ongoing government shutdown. Since the government was closed, critical economic data, like the official jobs report was withheld, leaving investors with incomplete information and just a lot of uncertainty. While there was a small rally mid-week, fueled by a positive report on private-sector jobs, this optimism was quickly canceled out. On Friday, the news dropped that consumer confidence had absolutely plunged to a three-year low, immediately raising alarms about the future of consumer spending and how it is gonna slow down the economy. The key thematic worry throughout the week was the high valuation risk in the tech sector, with many analysts arguing that the stocks were simply too expensive. These prices have been getting blown up for a while now, and this blip might be good to prevent a full on crash later on. However, the week closed out on a sort of positive note as the Senate managed to pass a measure aimed at resolving the funding crisis. The shutdown ending actually allows us to look at some key economic data, and hopefully it brings the market up. Next week is gonna be way too turbulent to make predictions, so that is gonna be it for this article.
Market Memo 