The Dow Jones Industrial Average (DJIA) trailed its major peers on Friday, sinking nearly 600 points at its session low before trimming losses to about 150 points. After a sharp mid-week selloff, AI-linked tech stocks staged a recovery, drawing flows back into the sector and reversing the brief rotation into financials and building materials. The renewed appetite for AI names pressured the Dow’s more traditional, value-heavy components.
Valuation risks resurface in overheated AI sector
Despite the rebound, concerns over stretched valuations remain a structural weakness in the AI-driven rally. Cloud infrastructure providers and semiconductor manufacturers continue to benefit as the core “shovel sellers” of the AI boom, but investors are increasingly wary of the sector’s circular investment dynamics.
Major players funnel billions into one another’s projects, while accounting specialists caution that some firms are aggressively categorizing investment spending as capital expenditure to flatter balance sheets.
Government shutdown ends, but data uncertainty persists
With the longest US federal government shutdown now resolved at least through January markets are waiting for clarity on when key economic data releases will resume. September’s delayed Nonfarm Payrolls report is widely expected next week, but uncertainty lingers after the White House signaled that October’s labor and inflation data may not be published at all. This ambiguity is adding a layer of caution to already fragile market sentiment.
