U.S. equities ended the week on an uneven note, recovering from sharp early declines on Friday yet failing to secure a broad rebound. Major indexes showed a mixed performance, highlighting a market still wrestling with stretched valuations, shifting rate-cut expectations, and uncertainty surrounding delayed economic data following the prolonged government shutdown.

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Stocks Rebound but Breadth Stays Weak

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The S&P 500 and Nasdaq 100 managed to finish the session essentially flat, while the Dow Jones Industrial Average slipped 280 points. Tech leaders helped stabilize the broader market, with Nvidia, Microsoft, Oracle, and Palantir bouncing back 1%–2% after Thursday’s heavy AI-driven selloff.
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But under the surface, breadth told a different story. Just as many large-cap stocks hit new 52-week lows as new highs, signaling a market struggling to find conviction heading into the final stretch of the year.
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The rebound, while welcome, wasn’t strong enough to ease concerns about overheated valuations in the AI complex. Investors continue to question whether the rapid surge in AI-related names has run too far ahead of fundamentals — especially with funding needs rising and earnings expectations coming under scrutiny.

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Government Shutdown Ends, Data Flood Begins

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The end of the lengthy government shutdown removed one major overhang for traders, but it immediately introduced a new challenge: data congestion.
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Federal agencies are now racing to release weeks of delayed economic reports, creating an unusual wave of condensed information at a time when the Federal Reserve is preparing for its next policy decision.
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For investors, the lack of timely data has created a temporary information vacuum. Markets are trying to read between the lines without the usual signals, making asset pricing and rate expectations more difficult to gauge.

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Rate-Cut Expectations Fade

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Hopes for a near-term rate cut have faded further, with traders increasingly skeptical that the Fed will ease policy as soon as previously expected. The combination of strong financial conditions, sticky inflation patches, and missing economic data has led to less confidence in any imminent shift.
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This recalibration has added pressure to growth and AI stocks, which tend to be more sensitive to changes in interest rate expectations.

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Michael Burry’s Put Positions Spark Debate

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Another major talking point last week came from Michael Burry. His fund officially closed, but not before his concentrated put positions against Nvidia and Palantir captured significant attention.
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Burry has been vocal about concerns over speculative excess in AI-related equities. His short exposure has fueled fresh debate over whether the sector’s explosive gains reflect genuine long-term growth potential — or if investors are underestimating the risks tied to massive capital requirements, competitive pressure, and eventual revenue deceleration.
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His positioning underscores a broader theme emerging in the market: even among sophisticated investors, there is no consensus on the true fair value of AI leaders as year-end approaches.

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What Comes Next?

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With volatility picking back up, delayed economic data about to hit the tape, and rate-cut hopes cooling, markets are entering a phase where nuance matters more than headlines. Traders will be parsing every incoming report — from inflation to labor markets — to rebuild a clear sense of economic direction.
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AI stocks remain the centerpiece of market sentiment, but the tone has shifted. Investors are no longer asking how high they can go. They’re now asking how much of the future may already be priced in.
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The next few weeks will determine whether last week’s pullback was a temporary reset — or the start of a more disciplined reassessment of tech valuations heading into year-end.