Heightened volatility was on Wall Street’s mind last week, as investors continued to focus on valuations of artificial intelligence (AI) stocks.
The Standard & Poor’s 500 Index fell 1.95 percent, while the Nasdaq Composite Index declined 2.74 percent. The Dow Jones Industrial Average slid 1.91 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slumped 3.25 percent.1,2
AI Valuation Worries
Stocks slid over the first half of the week as anticipation continued to build for Q3 results from one of the largest AI megacap tech stocks, due out midweek.
While the decline was led by megacap tech stocks, which typically drag down both the Nasdaq and S&P 500, the Dow Industrials also fell. With the government still playing catch-up on a backlog of economic reports following the shutdown, investors kept a close eye on big consumer-related stocks for insights into the economy.3
Then midweek, all three major averages rebounded, with the S&P snapping a four-day losing streak. Sentiment improved as investors turned more positive about another AI firm’s quarterly report due out after Wednesday’s closing bell.4
That firm’s results helped boost stocks after the opening bell on Thursday, but prices retreated quickly as investor anxiety built over whether the Fed would adjust rates next month. The Fed’s October meeting minutes revealed divisions among the Committee’s voting members. Additionally, the Labor Department’s September jobs report painted a mixed employment picture, which might complicate the Fed’s decision.5
Stocks rebounded on Friday after New York Fed President John Williams seemed to reassure investors that a rate adjustment at the Fed’s December meeting was still a possibility. The bounce was jagged, as the rebound had to battle through disappointing economic data on consumer sentiment and manufacturing activity.6
More Jobs, but Higher Jobless Rate
The delayed September jobs report came out last week, and showed employers added 119,000 jobs—the strongest monthly gain since April and a rebound from August’s loss of 4,000 jobs (which was later revised to a 22,000 gain). The jobs report was among the first post-shutdown reports to be published by the Labor Department.
The unemployment rate in September rose to 4.4 percent, higher than the 4.3 percent economists expected. It was the highest number in four years.
This was the Labor Department’s last monthly employment report before the Federal Reserve’s next meeting on December 9-10.7
Footnotes and Sources
- WSJ.com, November 21, 2025
- Investing.com, November 21, 2025
- CNBC.com, November 18, 2025
- CNBC.com, November 19, 2025
- WSJ.com, November 20, 2025
- CNBC.com, November 21, 2025
- WSJ.com, November 20, 2025
