Wall Street closed out a volatile week lower fueled by worries about the AI trade and valuations.The pullback followed weeks of record highs and light data flow amid the prolonged government shutdown. Sentiment across the country is close to the lowest it has ever been as rising inflation, rising unemployment, mass firings, a global trade war and now a record breaking government shutdown have combined to make people less than cheery as the holidays approach.
The November consumer sentiment index dropped 3.3 points to 50.3, just above a June 2022 reading of 50 that was the weakest in University of Michigan data back to 1978. A measure of current economic conditions slumped 6.3 points to a record low of 52.3 as anxiety mounted about the impact from the standoff in Washington.
Major indexes fell across the board, with the Nasdaq Composite sliding 3.0% for its worst weekly performance since April, while the S&P 500 lost 1.6%, and the Dow Jones Industrial Average shed 1.2%.
Future Wealth’s View
For every AI mega deal, there are economic data points being suppressed by the government shutdown. We haven’t gotten a jobs report in two months. We’ve gotten one reading of consumer price inflation, but it was delayed by weeks, and there’s no sign of when the next will come.The AI revolution spurred the most US job cuts for any October as layoffs hit 154K jobs with several companies reporting disappointing results and announcing mass layoffs. For that reason alone, investors should still be keeping an eye on the economy — especially the labor market, which has been highlighted by Fed Chair Jerome Powell as a particular area of weakness.
The US stock market has roared past every caution sign on its way to a dizzying 36% surge from April lows. November is traditionally the best month for stocks. It’s now staring down one favored by Warren Buffett that suggests equity valuations have become bloated. The “Buffett Indicator” shows the equity market is more than twice the size of the economy. Fair value as Buffett defines it is when the stock market capitalization is in parity with the size of the US economy. We had written in our report on Oct 19, 2025 about the importance of paying attention to this indicator.
Wall Street may finally be listening to Warren Buffett.