Wall Street heads into the new week on edge after a volatile stretch that saw major indices slide from record highs amid a mix of tepid labor data, tech-sector weakness, and a lack of fresh government economic reports due to the ongoing federal shutdown.
With earnings season winding down and few macro catalysts ahead, analysts expect choppy trading to continue as investors search for direction.
Tech weakness drags markets lower
The Nasdaq Composite led losses last week, tumbling more than 3% as heavyweight technology stocks slumped.
Nvidia fell over 7%, while Meta Platforms and Microsoft each lost about 4%, dragging all three major indexes into the red and snapping a three-week winning streak.
The S&P 500 is now roughly 2.4% below its record closing high from October 28, even after a broadly strong third-quarter earnings season.
Much of the recent turbulence has centered on artificial intelligence-linked names.
Stocks such as Palantir, which reported strong earnings, still faced steep selloffs, fueling concerns of buyer fatigue after a months-long rally.
The S&P 500 has surged 35% since April and 14% year-to-date, but many strategists warn that narrow market breadth, dominated by the “Magnificent Seven” stocks, could leave equities vulnerable to a correction.
“Investors should be cautious chasing extended upside in this concentrated rally,” said Craig Johnson, chief market technician at Piper Sandler.
He advised trimming exposure to sectors breaking key support levels and watching for consolidation in large-cap tech.
Shutdown stalls key economic data and clouds fed outlook
The continuing US government shutdown, now the longest in history, has delayed critical reports on inflation, retail sales, and consumer spending.
That absence of official data has left investors and policymakers alike navigating blind spots in assessing the economy’s health.
Private-sector sources have stepped in to fill the gap, though the signals have been mixed.
Workforce analytics firm Revelio Labs reported 9,100 job losses in October, while Challenger, Gray & Christmas said planned layoffs soared to more than 153,000 last month.
The Chicago Fed estimated unemployment likely rose to a four-year high.
These developments follow the ADP report showing private employment rose by 42,000 jobs in October, underscoring uncertainty in the labor market picture.
The lack of government data complicates the Federal Reserve’s next rate decision in December.
After cutting rates by a quarter point for the second consecutive meeting in October, Fed Chair Jerome Powell signaled that another move was “not a foregone conclusion.”
Futures markets now price roughly a 65% chance of another cut next month.
Light earnings calendar, heavy market caution
Earnings season is nearing its end, with 82.5% of S&P 500 companies that have reported so far beating analyst expectations, the strongest performance since mid-2021, according to LSEG IBES.
However, the steady flow of reports is slowing, leaving fewer catalysts to sustain momentum.
In the week ahead, investors will watch results from Walt Disney, Cisco Systems, and Applied Materials, while Nvidia’s closely watched earnings are due later in the month.
Economic releases will be sparse, limited mainly to Tuesday’s NFIB Small Business Index.
For now, traders are bracing for continued volatility. “There are people that are a little edgy over here,” Mark Malek, chief investment officer at Siebert Financial said in a CNBC report.
“We’re in this data blackout right now — there’s just not enough wind to carry the boat forward in these quiet times.”
Despite short-term turbulence, November’s historical strength for equities and optimism around easing monetary policy could still offer a constructive backdrop as year-end approaches.
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