Wall Street limped into the weekend Friday, November 7, 2025, as artificial intelligence stocks extended their brutal selloff and consumer sentiment plunged to its lowest level since June 2022, when inflation hovered near 40-year highs. The S&P 500 rose 8.48 points or 0.1% to 6,728.80, while the Dow Jones Industrial Average rose 74.80 points or 0.2% to 46,987.10 and the Nasdaq composite fell 49.46 points or 0.2% to 23,004.54, with all three major indexes posting their first weekly losses in the last four weeks.
U.S. stock markets closed sharply lower on Thursday as valuation concerns related to artificial intelligence stocks resurfaced, with the prevailing government shutdown also denting the confidence of market participants in risky assets like equities in the absence of government data. The Dow Jones Industrial Average fell 0.8% or 398.70 points to close at 46,912.30, while the tech-heavy Nasdaq Composite tumbled 1.9% or 445.81 points to finish at 23,053.99 due to the weak performance of AI infrastructure giants.
A risk-off week on Wall Street is drawing to a close, with some of the most-expensive areas of the market driving stocks lower while a renewed slide in crypto leaves the asset class barely up for 2025. The Nasdaq 100 is on track for its worst week since the April tariff-fueled tantrum when the index entered a bear market, demonstrating that valuation concerns can trigger rapid reversals even during powerful bull markets.
Worries over the government shutdown surged in the early part of November, pushing consumer sentiment to its lowest in more than three years and just off its worst level ever according to a University of Michigan survey released Friday. The university’s monthly Index of Consumer Sentiment posted a reading of 50.3 for the month, indicating a decline of 6.2% on the month and about 30% from a year ago, with sentiment last this low in June 2022 as inflation hovered around its highest level in 40 years.
The consumer confidence collapse creates additional headwinds for retail stocks already dealing with weakening demand as the crucial holiday shopping season approaches. Conservative economists note that the Trump administration’s determination to maintain the shutdown despite mounting human costs demonstrates commitment to fiscal discipline that may impose short-term economic pain but delivers long-term benefits through reduced government spending and workforce restructuring.
Investors booked profits on AI infrastructure developers due to concerns about the highly overstretched valuation of this space, with JPMorgan Chase’s CEO Jamie Dimon having warned last month about a significant stock market correction within the next six months to two years. Goldman Sachs’ CEO David Solomon said that it’s likely there’ll be a 10 to 20% drawdown in equity markets sometime in the next 12 to 24 months, while Morgan Stanley CEO Ted Pick said we should also welcome the possibility that there would be drawdowns, 10 to 15% drawdowns that are not driven by some sort of macro cliff effect.
The coordinated warnings from Wall Street’s most influential executives have proven prescient as technology stocks experience precisely the type of correction these leaders anticipated. Conservative investors who heeded these warnings by reducing exposure to high-valuation artificial intelligence names avoided the worst of this week’s selloff, vindicating defensive positioning despite missing some upside during October’s rally.
The report revealed that 2025 is the worst year for announced layoffs since 2009, with October seeing the highest number of job cuts in the technology sector as a result of restructuring due to AI integration, with this sector shedding 33,281 jobs in the last month. Additionally, workforce analytics company Revelio Labs reported that the U.S. economy retrenched 9,100 jobs in October, with the government sector accounting for the bulk of the decline.
The paradox of artificial intelligence creating massive stock market gains while simultaneously destroying jobs illustrates the disruptive nature of the technology that bulls characterize as transformative productivity revolution. Critics argue that AI-driven layoffs demonstrate that technology companies view automation as substitute for human workers rather than complement, raising questions about whether productivity improvements will benefit shareholders at the expense of employment.
Quarterly reports from U.S. companies were a key focus, with payments company Block, which operates the Square and Cash App businesses, sinking after turning in results that fell short of forecasts, while exercise equipment maker Peloton jumped after its results beat estimates. The divergent reactions demonstrate that Wall Street remains selective about which companies deserve premium valuations even within the broader technology selloff.
Despite the slide, flows remain supportive with US equity funds having an eighth consecutive week of inflows, the longest streak this year, but cash attracted the bulk of inflows according to Bank of America citing EPFR Global data. The shift toward cash suggests investors remain committed to equity exposure in principle but are raising defensive positioning rather than abandoning stocks entirely.
Traders are pondering a moment of weakness embedded in a multi-month rip higher for stocks, yet the market on balance looks poised for further gains according to Goldman Sachs’ Tony Pasquariello, who wrote that I’m not saying that risk/reward is overly compelling, nor that this is an ideal location to add a bunch of incremental risk. The cautious assessment from Goldman’s hedge fund coverage head reflects sophistication about current market conditions that rewards selectivity over aggressive momentum chasing.
While the US payrolls report was not released this Friday due to the shutdown, a survey conducted by 22V Research showed that a labor-market unwind is the biggest risk to trading, explaining why risk assets and bond yields have been unusually sensitive to any news data on that front. The absence of official employment data creates uncertainty that amplifies market volatility as investors lack reliable information about economic conditions heading into the critical holiday season.
The government shutdown entering its 38th day has created unprecedented information vacuum that forces investors to navigate blindly through an environment where anecdotal evidence and corporate earnings provide the only visibility into economic conditions. The delayed release of employment reports, consumer spending figures, and inflation data leaves markets vulnerable to overreacting to individual data points like the Michigan consumer sentiment survey that would normally be evaluated alongside comprehensive government statistics.
The broad market index experienced its longest streak without breaching its 50-day moving average since a 147-day run ended in 2007, though Friday’s modest gains did little to repair technical damage from Thursday’s sharp declines. Conservative technicians note that while the S&P 500 remains above key support levels, the deteriorating momentum suggests that additional weakness could trigger more serious correction if bulls fail to defend current levels.
Bitcoin and cryptocurrency markets extended their decline alongside equities, with a renewed slide in crypto leaving the asset class barely up for 2025. The digital asset’s inability to rally despite Federal Reserve rate cuts and trade deal optimism with China demonstrates that cryptocurrency has failed to achieve its aspiration to serve as safe-haven alternative to traditional assets, instead behaving as high-beta technology proxy that declines when sentiment favors defensive positioning.
Treasury bonds rallied as safe-haven demand returned following the equity market decline, with yields tumbling as investors rotated from stocks into fixed income. The flight to quality buying demonstrates that traditional safe havens retain appeal when stock markets retreat, particularly given concerns about excessive valuations in technology sectors that have powered the 2025 advance.
Energy stocks provided rare bright spot during the week’s selloff, with the Energy Select Sector SPDR advancing 1% while Consumer Discretionary and Technology sectors slipped 2.3% and 2% respectively. The sector rotation reflects investor recognition that energy companies benefit from sustained oil prices above $60 per barrel while technology names face growing skepticism about whether artificial intelligence investments will generate adequate returns.
The question facing investors as November’s second week begins is whether this week’s selloff represents healthy consolidation within an ongoing bull market or the beginning of more serious correction that Goldman Sachs CEO David Solomon warned could reach 10% to 20%. The convergence of stretched valuations, deteriorating consumer confidence, economic uncertainty from the government shutdown, and warnings from Wall Street executives creates treacherous environment where multiple bearish catalysts threaten the year-end rally many investors anticipated.
Stock indexes wound up mixed on Wall Street but still clocked their first weekly loss in the last four, with the S&P 500 down 111.40 points or 1.6% for the week, the Dow down 575.77 points or 1.2%, and the Nasdaq down 720.42 points or 3%. The technology-heavy Nasdaq’s 3% weekly decline demonstrates that artificial intelligence names bore the brunt of selling pressure as investors questioned whether current valuations adequately reflect execution risks and competitive pressures.
Conservative investors should recognize that this week’s selloff validates warnings that have been building for months about unsustainable valuations in artificial intelligence stocks. The violent moves in both directions illustrate the treacherous environment facing momentum traders who have driven these names to unprecedented multiples. The ability of markets to stabilize and resume their upward trajectory will depend on whether upcoming earnings reports demonstrate that AI investments are translating into revenue growth justifying current prices, or whether spending levels represent speculative excess that future corrections will punish more severely.
