Stocks pulled back Thursday as the week’s unease around inflated AI valuations and weak China trade data spilled into global sentiment. 

The S&P 500 fell 0.8%, the Nasdaq lost 1.9%, and the Dow slipped 0.5%, led by fresh declines in technology and consumer discretionary names. The selling was orderly but decisive, marking the largest weekly drop for tech in seven months.

Across Asia, soft Chinese export data amplified the sense of slowdown, with shipments down 1.1% in October, the sharpest contraction since February, underscoring how deeply Trump’s tariffs are cutting into demand. 

The Nikkei tumbled 1.2% and Seoul’s KOSPI fell 1.8% for the week, while Europe’s STOXX 600 drifted lower despite firmer U.S. futures early in the session.

AI exuberance has clearly hit its first test. SoftBank’s shares have fallen nearly 20% this week, shedding $50 billion in value, while chipmakers and data infrastructure names lost ground amid renewed questions about profitability. 

Fed Chair Powell’s cautious tone last week and subsequent remarks from regional presidents reinforced that valuations, not fundamentals, are dictating much of tech’s trajectory.

Bonds, gold, and the yen all caught a safety bid as investors rotated defensively. The 10-year Treasury yield eased to 4.09%, gold hovered near $4,000, and oil steadied just below $60. Bitcoin, another barometer for speculative risk, slid to $101,000, down 8% on the week.

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Futures were softer overnight following Thursday’s slide, pointing to a tentative open as investors digest another round of tech-led weakness. Nasdaq, S&P, and Dow contracts traded down about a quarter of a percent amid fading momentum in AI and semiconductor names.

The pullback comes at a delicate juncture: the government shutdown has now entered day 38, suspending official payroll and inflation reports and leaving private indicators to shape sentiment. 

Thursday’s Challenger data showing the highest October layoff total in 22 years continues to echo through positioning, as traders weigh whether corporate belt-tightening signals efficiency or exhaustion.

Today’s spotlight shifts to the University of Michigan’s consumer sentiment survey at 10 a.m. ET, one of the few live reads left in the data blackout. Economists expect a modest dip, but the inflation-expectations component will matter more for Fed watchers.

Into the final hours of the week, traders are watching whether buyers step in to defend key support near the S&P’s 50-day average or if momentum funds press short into the weekend. For now, the tone is one of rotation rather than retreat, but conviction remains scarce.

Central bankers continued to tap the brakes on aggressive easing.

Cleveland Fed President Beth Hammack warned that inflation remains “too high” and that monetary policy is “barely restrictive, if at all,” signaling resistance to another near-term rate cut. She expects inflation to remain around 3% through next year before gradually falling back toward target.

Chicago Fed’s Austan Goolsbee voiced similar caution, citing the data blackout from the government shutdown as a reason to “slow down” on further rate cuts until inflation readings return. 

Futures markets still price roughly a 70% chance of a December cut, though the tone has shifted from urgency to patience.

Abroad, the Bank of England held steady at 4.0% in a split vote, with two members pushing for a cut. The ECB echoed that caution earlier in the week, while Asia’s central banks largely stayed in step. The global message: easing is likely, but not blindly.

China’s economy continues to rewrite the global energy and technology map. A new report highlights that Beijing has now installed nearly 900 gigawatts of solar capacity, roughly double the U.S. and Europe combined, and can add a terawatt of renewables annually, equivalent to 300 nuclear plants. 

This transformation is redefining both energy security and industrial leverage, as Chinese firms now earn more from exporting clean-tech than the U.S. does from fossil fuels.

At the same time, Canada is showing the opposite side of the trade equation. Trump’s tariffs on autos, steel, and lumber have pushed Canada’s unemployment rate to its highest non-pandemic level in nearly a decade, prompting emergency fiscal measures from Prime Minister Mark Carney’s government. 

The country is bracing for its first technical recession since 2015, as manufacturers retrench and foreign investment stalls.

Meanwhile, Ukraine’s defense of Pokrovsk appears to be in its final phase after 21 months of fighting. Russian forces now control most of the city and nearby Myrhnohrad, marking a costly but tactical gain that could enable deeper advances in the Donbas. Drone warfare has turned the fight into a battle of attrition, with Ukraine struggling to match Russia’s scale and supply.

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In Washington, the shutdown entered its sixth week with signs of fatigue setting in. Senate Majority Leader John Thune (R., S.D.) plans a Friday vote on a revised proposal that would pair a short-term spending measure with three full-year funding bills. 

The deal aims to reopen much of the government while leaving negotiations over Affordable Care Act subsidies unresolved.

Democrats remain divided, with moderates open to a standalone vote on ACA extensions while progressives demand guarantees in the final text.

The White House has shown little willingness to compromise. President Trump continues to press Senate Republicans to eliminate the filibuster to bypass Democrats entirely, a move many GOP senators have resisted.

The FAA’s 10% cut to flight traffic at 40 major airports, which takes effect today, is the first tangible sign of public disruption. Airlines have begun mass rebookings, and cancellations are spreading through major hubs in Atlanta, Chicago, and New York. 

Hotel and rental-car chains are reporting a surge in last-minute road travel, reflecting how quickly the shutdown’s impact is bleeding into the real economy.

In parallel, the Senate narrowly rejected a War Powers resolution to limit Trump’s authority to take military action in Venezuela without congressional approval. The 51–49 vote underscored divisions over recent U.S. strikes on alleged drug boats and signals that Washington’s appetite for confrontation in the Caribbean remains constrained but unresolved.

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CEG, KKR, DUK

Asia: Nikkei -1.19%, Shanghai -0.25%
Europe: FTSE -0.70%, DAX -0.94%

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Markets enter Friday in a defensive crouch after two straight days of tech-led losses that have erased much of the week’s earlier strength. The tone feels measured rather than panicked, with futures modestly lower and traders eyeing whether dip-buying returns ahead of the weekend.

After six months of nearly uninterrupted gains, stretched AI valuations and rising caution from central bankers have reintroduced two-way risk. Positioning has become thinner, liquidity tighter, and the shutdown-driven data void means each private report or Fed comment carries outsized weight.

The University of Michigan’s consumer sentiment survey will offer the day’s only official read on inflation expectations and spending confidence. 

With Treasury yields holding near 4.1% and the dollar drifting lower, markets appear to be settling into a holding pattern, waiting for clarity on policy, data, and the next catalyst capable of restoring momentum.