The Dow Jones Industrial Average (DJIA) looks set to close the week almost unchanged, with price action hovering near the 47,500 mark.
Despite the Federal Reserve’s (Fed) highly anticipated rate cut and the Dow briefly touching a new record above 48,000, market enthusiasm has been muted.
Investors appear unconvinced by the Fed’s cautious approach to easing, balancing disappointment with optimism that renewed trade tensions between the US and China may not escalate under the Trump administration’s measured tone.
AI spending remains both a catalyst and a concern
Artificial intelligence (AI) continues to drive the tech rally, but its sustainability is under scrutiny. Major tech firms delivered robust quarterly results, boosted by relentless demand for AI infrastructure from data centers to semiconductor hardware.
Yet, the industry’s inability to translate this massive investment into consistent profit growth remains a growing concern. The widening gap between technological advancement and commercial viability underscores the fragility of the current rally.
Rising AI costs reward infrastructure players
Amazon (AMZN) was a standout performer on Friday, with shares climbing sharply after the company reported a 20% year-over-year revenue jump in its cloud computing division for the third quarter. The upbeat results helped lift key US equity indexes into positive territory.
In contrast, Meta Platforms (META) slipped as investors digested its acknowledgment that spending on large language models (LLMs) has surged into the tens of billions of dollars with limited revenue return to date.
The imbalance highlights how the AI boom continues to favor infrastructure providers the “sellers of shovels” over companies directly developing AI-driven products.
Trade tensions ease but uncertainty lingers
The latest flare-up in US-China trade tensions appears to be cooling. While no formal agreements have been signed, discussions between US President Donald Trump and Chinese President Xi Jinping reportedly produced a tentative understanding to pause new protectionist measures for one year.
Beijing has yet to follow through on promises to lift trade barriers or expand purchases of US agricultural goods, while Washington has agreed not to impose additional tariffs for now. Markets remain cautiously optimistic, but with no binding commitments, the durability of this trade truce is still in question.
