AI Bubble Fears, Jobs Data Ahead, and What’s Next for Markets

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Good morning & Happy Monday.

It’s a cautious start to the week as Wall Street mull over mixed signals: a strong December rally run leash-clipped by renewed AI valuation fears, and a backdrop of persistent rate-cut expectations. With economic data and volatility looming, investors are recalibrating risk and opportunity ahead of year-end.

Let’s get into it!

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📈Market News

US Stocks Drift as AI Sector Volatility Continues
U.S. markets opened flatter on Monday, with the S&P 500 and Dow inching lower while the Nasdaq slid modestly amid renewed AI stock weakness - despite some rebound in Nvidia shares. Investors are biding their time ahead of key economic data this week, including jobs and inflation updates that could steer Fed expectations.

Bridgewater Warns AI Spending Boom Could Be ‘Dangerous’
Bridgewater Associates cautioned that Big Tech’s reliance on external capital to fund AI infrastructure has surged dramatically - from $15B in 2024 to $125B in 2025 - raising concerns that the current AI investment cycle could resemble a bubble if profitability fails to keep pace.

Global Equities Feel AI Pressure: ASX Tumbles
Australian equities slid, with the ASX 200 down ~0.7%, led by materials stocks and broad sector weakness as AI-linked fears and commodity price pressures weighed on sentiment — underscoring that the market nervousness isn’t confined to the U.S.

Wall Street Week Ahead: Economic Reports in Focus
Investors are positioning for a data-heavy week, with job growth and inflation figures set to dominate. Markets are currently pricing in high odds of interest rate cuts next year, but volatility and profit-taking in tech names are complicating the risk backdrop.

💻Tech & Innovation

AI Hiring Rebound Adds Complexity to Job Narrative
A recent survey finds CEOs increasingly adding entry-level roles driven by AI project needs, even as executives acknowledge ongoing layoffs in some legacy lines - reflecting a nuanced picture of how AI is reshaping employment on the ground.

Oracle’s Forecast Pain Still Echoing
Oracle’s disappointing sales outlook has continued to cast a shadow over the AI space, reigniting jitters over earnings sustainability and the aggressive valuations seen in many AI-linked equities - a theme that’s rippled through tech sectors recently.

Citi’s 2026 S&P 500 Outlook Still Bullish, But With Caveats
Citi released its year-ahead forecast last week, projecting double-digit gains for the S&P 500 based on earnings growth and accommodative policy but emphasizing the need for stock selection amid mounting valuation dispersion.

Market Watchers Warn Overheated Equities Need Scrutiny
Market strategist Andrew Freris cautioned that strong equity performance, especially when driven by optimistic rate-cut expectations, may be outpacing economic fundamentals — a reminder to watch breadth and risk carefully.

📊Investing & Strategies

How to Navigate Volatile Breadth With Discipline
Diversification and selective exposure matter when only a few stocks are driving the market. Read about how market breadth can signal turning points and why disciplined positioning helps protect gains.

Why Valuation and Profitability Still Matter in Tech
Even in AI-driven rallies, fundamentals like earnings and profit margins anchor long-term value. Here’s a primer on how valuation metrics help distinguish hype from substance.

When to Lean Into Jobs and Inflation Signals
Economic data can shift expectations on rates and risk assets. This explainers shows how inflation and jobs figures influence markets, helping investors read the macro tea leaves.

The Case for Tactical Flexibility Through Year-End
In uncertain markets, tactical flexibility - adjusting exposure without abandoning strategy - can help manage risk and capture opportunities. This piece walks through practical allocation moves for choppy conditions.

🔮Looking Ahead: Strategy Thoughts

Investors begin the week positioning around major U.S. data releases and lingering AI valuation concerns, even as rate-cut expectations persist. With markets wobbling between optimism and caution, execution and discipline could matter more than prediction as we close out 2025.