The U.S. government is back open after the longest shutdown on record, and federal agencies are now scrambling to publish a mountain of delayed economic data. But here's the problem: some of that data—particularly October jobs and inflation figures—might be permanently flawed because collection stopped during the closure.
That's left the Federal Reserve in an awkward spot heading into its December policy meeting. Several Fed members have signaled that the inflation fight isn't over, and markets are now pricing rate cut odds as a coin flip between a 25-basis-point cut and holding steady.
AI Stocks Hit a Wall
Meanwhile, Wall Street had a wild week. The Dow Jones Industrial Average touched fresh record highs on Wednesday, then reversed sharply Thursday as AI stocks led a tech rout. The culprit? Growing anxiety over supply-side constraints in the AI infrastructure space.
The catalyst was CoreWeave Inc. (CRWV), the AI cloud infrastructure company that missed third-quarter expectations and warned of serious infrastructure delivery delays. Management made it clear: demand for their platform is vastly outpacing the ability to actually build and deploy new capacity.
"There is no entity that has the capacity to be able to deliver infrastructure globally in order to meet the demand that's being driven by the largest technology companies in the world, by the largest AI labs in the world, by government, by enterprise. All of these things are coming to bear," CEO Mike Intrator warned.
Investors didn't take it well. What some analysts are now calling the "backlog paradox"—unprecedented demand with no clear timeline for fulfillment—appears to be a structural issue across the AI sector. CoreWeave shares, which had rallied 240% before earnings, tumbled 25% for the week.
Old Economy Stocks Shine
While AI stocks stumbled, sectors tied to domestic demand and real economy activity showed relative strength. Health care and autos have been particularly robust as optimism around consumer spending rebounded following the government reopening.
Eli Lilly Co. (LLY) and General Motors Co. (GM) have been among the biggest gainers over the past month, both up about 25%.
GM shares rallied to record highs near $73 on Thursday, capping seven straight daily gains before easing slightly on Friday. The Detroit automaker continues riding momentum from a better-than-expected quarterly report released in October, along with positive guidance for the rest of the year.
Year-to-date, GM is now up 33%, well ahead of the S&P 500's 14% and the Nasdaq 100's 18% gains.
