Stock Market Faces Thanksgiving Volatility as AI Bubble Concerns Rise

Investors are preparing for a potentially turbulent week in the stock market as concerns about the sustainability of the artificial intelligence (AI) boom resurface. The market has experienced notable fluctuations, particularly among major technology stocks, and upcoming economic data and earnings reports are expected to add further pressure.

As of Monday morning, the Nasdaq index rose nearly 1%, while the S&P 500 indicated a gain of approximately 0.8%. Despite this positive start, a repeat of last week’s downturn remains a possibility, especially following significant intraday swings observed recently. During the week ending November 21, 2023, the Nasdaq fell by nearly 3%, and the S&P 500 dropped almost 2%. These losses were primarily driven by prominent tech companies, such as Meta and Microsoft, as traders began to question whether the AI-driven spending that has supported corporate capital expenditure throughout the year is sustainable.

The volatility was underscored by Nvidia’s recent earnings report, which caused the S&P 500 to fluctuate by approximately three percentage points from peak to close. This marked a significant moment, indicating that fears surrounding an AI bubble may be catching up with the previously optimistic market sentiment. In contrast, Alphabet demonstrated resilience, experiencing an 8% increase for the week, buoyed by Berkshire Hathaway‘s historic investment in the company.

Economic Data and Earnings Reports Ahead

This week is set to be significant, with delayed economic data releases and key earnings reports from major retailers. On Tuesday, investors will receive updates on September’s producer prices, retail sales, and the Conference Board‘s November consumer confidence index. Later in the week, the government will publish its latest estimate of third-quarter gross domestic product (GDP).

Although earnings season is winding down, several retailers will provide crucial insights as the shopping season approaches. Companies such as Dick’s Sporting Goods, Best Buy, Urban Outfitters, Abercrombie, and Kohl’s are scheduled to report on Tuesday. Additionally, smaller technology firms, including Zoom, Alibaba, and Dell, are expected to contribute to the retail narrative with their own earnings announcements.

On Wednesday, Deere will shed light on the agricultural sector’s health, a topic particularly relevant amid ongoing trade tensions. The company has faced declining earnings in 2025 due to increased tariffs, which have raised costs and discouraged significant capital investments from American farmers.

Broader Implications for the Market

The current market environment reflects a mix of optimism and apprehension. While some sectors are thriving, others face challenges, including a noted decline in hiring outside non-discretionary industries. Policymakers and investors are now looking to the Federal Reserve for potential interest rate cuts in December, following reductions in September and October. However, the effectiveness of such measures in stimulating hiring or stabilizing the faltering U.S. housing market remains uncertain.

As Thanksgiving approaches, the stock market is positioned for a critical test amid these complex dynamics. Investors will be closely monitoring economic indicators and corporate earnings, as they seek to navigate the intricate landscape shaped by AI investments and broader economic trends.