The Dow Jones Industrial Average (DJIA) climbed modestly on Tuesday, outperforming other major US indexes as optimism grew over progress toward a short-term government funding deal.
While the broader market struggled amid fading enthusiasm for artificial intelligence (AI) stocks, the Dow pushed back toward the 48,000 level, supported by hopes that a resolution in Washington will allow the release of key labor and inflation data crucial for monetary policy guidance.
investors look to Washington for relief
Lawmakers in the United States are working to secure enough votes to pass a temporary funding measure that would keep the federal government running through the end of January.
The deal, if passed, would end what has become the longest government shutdown in US history and restore the flow of critical economic data that has been frozen during the closure.
The return of official labor market and inflation reports is seen as vital for the Federal Reserve (Fed), which continues to face pressure from markets to deliver rate cuts in the coming months. Investors are betting that the resumption of data releases will provide the clarity needed for the Fed to adjust its policy path accordingly.
AI sector faces scrutiny over hidden costs
Meanwhile, the fading AI rally remains a drag on broader equity sentiment. Prominent investor Michael Burry, known for his bearish market calls, warned earlier this week that much of the optimism surrounding the AI boom could be built on shaky financial assumptions.
Writing on X (formerly Twitter), Burry argued that major AI “hyperscalers”—companies that supply computational infrastructure to AI developers—may be underestimating the true costs of maintaining and upgrading their vast data centers.
According to Burry, constant infrastructure upgrades to support rising AI demand are driving depreciation costs far higher than reported, suggesting that many tech firms are overstating their future earnings potential. He cautioned that as AI adoption accelerates, the heavy capital requirements could erode profitability faster than investors anticipate.
