After a week packed with earnings reports and economic news, investors may experience a relatively quiet period ahead. Last week, US tech stocks endured one of their worst stretches this year, with declines in Palantir (PLTR.US) and NVIDIA (NVDA.US) dragging the tech-heavy Nasdaq down 3%—its worst weekly performance since early April's so-called "liberation day," despite a slight rebound on Friday. The S&P 500 fell 1.7%, while the Dow Jones Industrial Average dropped about 1.3%.
The US government shutdown officially became the longest in history last week and is expected to extend into its sixth week. While the shutdown continues to disrupt official economic data releases, private-sector reports suggest it is weighing on economic prospects. US consumer confidence plunged to a three-year low in November, with concerns mounting over the shutdown's impact on the economy and personal finances. Additionally, data showed corporate layoffs in October reached their highest level for the month since 2003.
This week, investors will see the final wave of major Q3 earnings reports, including tech firms like CoreWeave (CRWV.US), Oklo (OKLO.US), and Rocket Lab (RKLB.US), alongside Disney (DIS.US), Paramount Skydance (PSKY.US), and Brookfield Corp (BN.US). However, the prolonged shutdown will likely delay key economic indicators such as CPI, PPI, retail sales, and jobless claims, leaving the NFIB’s small-business optimism index and MBA mortgage applications as focal points.
"Growth Must Be Sustained" Global tech giants are betting big on AI, driving their valuations to record highs. Yet doubts are growing about whether growth can justify these premiums. "The market is torn between excitement over AI’s potential and fears that current valuations imply unrealistic expectations," said Thomas Shipp, LPL Financial’s equity research head. Last week’s selloff reflected rising nerves: NVIDIA slumped over 7%—its worst week in a year—while Meta (META.US) and Microsoft (MSFT.US) each fell more than 4%.
Analysts highlight "circular investments" among AI leaders. NVIDIA’s $6.3B deal with CoreWeave—a client in which it holds a 7% stake—and reported $2B investment in xAI exemplify this trend. OpenAI has partnered with Oracle (ORCL.US), CoreWeave, and AMD (AMD.US), while Broadcom (AVGO.US) is reportedly designing its first in-house AI chip. "These moves signal confidence in downstream profitability but also raise concerns about propping up unprofitable ventures to sustain chip demand," Shipp noted.
Investors also worry about the staggering capital required to achieve AI ambitions. Meta’s unexpected hike in AI capex triggered a 10% stock drop post-Q3 earnings, while OpenAI CEO Sam Altman clarified plans to spend ~$1.4T over eight years despite being unprofitable: "Clearly, this demands sustained revenue growth." US tech leaders warn underinvestment risks losing the global AI race.
Fast Food Slowdown The sector faced headwinds as Papa John’s (PZZA.US) plunged 20% after Apollo Global (APO.US) scrapped a $2.1B buyout, while Yum! Brands (YUM.US) explored taking Pizza Hut private amid eight straight quarters of declining sales. TD Cowen downgraded targets for Cava (CAVA.US), Dutch Bros (BROS.US), Shake Shack (SHAK.US), and Starbucks (SBUX.US), citing macroeconomic pressures on young consumers. Chipotle (CMG.US) cut its annual sales outlook for the third consecutive quarter, noting broad-based "frequency declines," particularly among sub-$100K households and 25–35-year-olds grappling with rising unemployment and student debt.
Yet McDonald’s (MCD.US) bucked the trend, with US same-store sales beating estimates for a second quarter, crediting its "value-focused" strategy. Its call highlighted strong high-income consumer growth—a boon for $8 meals but a challenge for $16 salads.