A Light Week Awaiting Investors

After a week filled with intense news, investors anticipate a calmer week ahead. During this period, technology stocks experienced one of the worst downturns of the year. The decline in Palantir (PLTR) and Nvidia (NVDA) shares led to a 3% drop in the tech-heavy Nasdaq index, marking its worst week since "D-Day." The S&P 500 (^GSPC) closed the week down 1.7%, while the Dow Jones (^DJI) faced an approximate 1.3% loss.

The government shutdown in the United States continues to hinder the release of official economic data. However, private sector sources indicate that the shutdown has negatively affected the economic outlook. In November, U.S. consumer sentiment fell to its lowest level in over three years, raising concerns about the economy. Recent private sector data revealed that job layoffs in October reached their highest level since 2003.

Next week, investors will receive the last significant data for third-quarter earnings reports. Technology companies like CoreWeave (CRWV), Oklo (OKLO), and Rocket Lab (RKLB) will deliver market data. Furthermore, results from many companies, including The Walt Disney Company (DIS), Paramount Skydance (PSKY), and Brookfield Corporation (BN), are also expected.

Regarding economic data, the ongoing government shutdown will postpone the release of the Consumer Price Index and Producers Price Index reports, which are expected from the Bureau of Labor Statistics. Additionally, housing applications and retail price data are being observed at impressive levels.

Investors will need to keep an eye on the upcoming data. The National Federation of Independent Business's small business optimism index and mortgage application data from the Mortgage Bankers Association are among the highlighted data for this week.

On the other hand, large technology companies known for their investments in AI technologies have also seen a significant increase among investors concerning their valuations. However, concerns are rising about the sustainability of the required growth to support current valuations. Nvidia signed a $6.3 billion deal with CoreWeave, while similar cyclical investments are being made to unlock the profitability codes of companies.

Moreover, investors are worried about how much these companies need to spend to achieve the high targets they aim for. At the end of October, when Meta (META) signaled an increase in AI investments, its shares fell by more than 10%. OpenAI committed to $1.4 trillion over eight years but still has not been profitable.

We are in a period where tech leaders have raised concerns about the risk of the U.S. losing its global AI leadership. Many American firms continue to invest heavily in chip manufacturing and AI developments. Nvidia CEO Jensen Huang has warned about China potentially winning the AI race, indicating that competition in this field is intensifying. Nvidia will announce its third-quarter earnings on November 19.

The fast-food sector is going through a tough month. Papa John's (PZZA) shares dropped by over 20% after the cancellation of its $2.2 billion deal with Apollo Global Management (APO). Meanwhile, Pizza Hut has had to close its eighth quarter with a loss and is exploring the possibility of a new deal.

However, some restaurant chains are more fortunate. McDonald's (MCD) reported same-store sales above estimates for the second consecutive quarter. Rapid growth among upper-income groups stands out as a positive development in this environment. However, this situation presents a challenging scenario for those selling $16 salads.

In this difficult economic period, investors should be cautious. A lower data flow is expected in the upcoming week; however, it is still beneficial to keep an eye on significant gains and developments.