Nvidia stock was down more than 3% when the market opened Friday and Tesla shares were off about 4%, as a tech stock selloff that had already driven major market indexes to their worst day in a month on Thursday looked set to continue to end the week.
The Dow Jones Industrial Average fell more than 530 points, or 1.1%, while the S&P 500 was off 1% and the tech-heavy Nasdaq fell about 1.2%. Other chip stocks also fell along with AI chip behemoth Nvidia, with AMD shares down more than 4% and Micron Technology stock off about 1%.
Walmart stock was down around 2% when the market opened, following the company’s announcement that longtime CEO Doug McMillon would retire early next year.
The Dow hit 48,000 for the first time this week. But stocks quickly retreated from there, as the end of the longest federal government shutdown in American history seemed to refocus investor anxieties on the risk that the Federal Reserve will pause interest rate cuts, and on fears of a bubble in AI stock valuations.
Heading into the official government reopening, markets had already been treating the shutdown with an assumption that it was going to end, which left little room for a relief rally once the deal finally materialized. Investors seem to already be onto the next, harder problem: rebuilding the economic picture that the shutdown erased.
That’s where the anxiety lives. Forty-plus days without federal releases means the Fed enters its next policy cycle with partial visibility. Some data will come back quickly; some may never arrive at all. BMO Private Wealth’s Carol Schleif put the fine print on it in a note: “While we have always expected that many of the data points missed during the shutdown will remain dark, there are questions about what the inflation and jobs data will look like once these reports come back online.” She said she wouldn’t be surprised to see some “market chop over the coming weeks” as the data pipeline sputters back to life. Washington’s reopening restores operations, not clarity.
Deutsche Bank’s Jim Reid said in a note that it has “certainly been a volatile week in terms of sentiment, with relief over the end of the shutdown vying with concerns over AI valuations and whether the Federal Reserve will cut rates again.” Odds of a December 25-basis-point cut are around 54%, according to the CME FedWatch tool — that’s up from a 50% chance yesterday but down from a 70% chance a week ago.
Traders now have to weigh a backlog of distorted indicators against a labor market that, even before the shutdown, showed signs of fraying. Because the government’s data pipeline was frozen during the shutdown, October’s labor picture came from private-sector trackers — and those proxies weren’t pretty. The estimates pointed to job losses in government and retail, alongside a surge in announced layoffs driven by cost-cutting and the growing reach of AI.