The Shutdown Is Over. Winter Is Usually Good For Stocks.

Core Insights - The stock market faced a decline despite the end of the longest government shutdown in U.S. history, with the tech-heavy Nasdaq dropping over 2% [1][3] - The reopening of the federal government is expected to alleviate economic pressures from over 1 million federal workers who were unpaid during the shutdown [2] - Concerns about an AI bubble and fading expectations for a December rate cut are contributing to the downturn in tech stocks [4][8] Market Performance - Historically, the end of government shutdowns has been positive for stock performance, with the S&P 500 typically rising more in the one- and three-month periods following a budget resolution [5] - November has been the best month for the S&P 500 on average since 2000, with December often seeing a "Santa Claus rally" [6] AI Bubble Concerns - Investors are increasingly worried that excessive spending on data centers is leading to an unsustainable AI boom, with significant drops in stocks of major AI beneficiaries like Nvidia and Palantir [9] - OpenAI is valued at $500 billion despite not expecting to turn a profit until 2029, while Palantir trades at approximately 240 times forward earnings [9] - Major tech companies are planning to invest hundreds of billions in AI infrastructure, raising skepticism among investors regarding the gap between AI spending and revenue [10] Federal Reserve and Economic Data - The end of the government shutdown has delayed crucial economic data, leaving uncertainty about inflation and labor market conditions, which could impact Federal Reserve policy decisions [10][11] - The likelihood of a December rate cut has decreased significantly, with current odds at 47%, down from 96% a month ago [11]