The Dow Jones Industrial Average rose on Tuesday while other stock indexes remained unchanged. This change comes as the enthusiasm for AI technology seems to be slowing down. The Dow is getting close to the 48,000 mark, boosted by hopes of a temporary solution for U.S. government funding. This would allow for the release of important labor and inflation data. Lawmakers are working on a funding bill to keep federal services running until the end of January, which would help avoid potential political stand-offs. If the government reopens following its longest shutdown in history, we will see key economic figures that could influence the Federal Reserve’s decisions on interest rates.

Concerns About AI Growth Expectations

Michael Burry has raised concerns about the high growth expectations in the AI sector. He believes that companies providing AI infrastructure may be inaccurately reporting their finances, especially regarding depreciation costs. This could lead to AI investments losing value faster than expected. Artificial intelligence (AI) includes areas like machine learning, neural networks, and natural language processing. The goal is to develop machines that can solve problems like humans. AI is used in various applications, including generative platforms for text, credit rating systems, drug development, and recommendation algorithms. Key players in the AI field include Nvidia, Palantir Technologies, and Microsoft. Nvidia makes AI chips, Palantir provides data analytics tools, and Microsoft uses OpenAI’s technology. The launch of ChatGPT in 2022 sparked a rally in AI stocks, particularly for Nvidia, which raised concerns about a potential tech bubble, reminiscent of the DotCom era. As we check the market on November 12, 2025, the Dow remains strong while enthusiasm for AI stocks wanes. The focus is on the anticipated end of the U.S. government shutdown, which has lasted over 40 days and is the longest in history. This resolution not only supports the Dow but also means that important economic data, which has been delayed, will finally be available.

Implications of Shutdown Ending

The end of the shutdown will allow us to receive crucial inflation and labor data that the Federal Reserve needs to consider expected interest rate cuts. The last Consumer Price Index (CPI) report indicated persistent inflation at around 3.5%. The upcoming figures could confirm the possibility of lower rates or force the Fed to maintain current levels, leading to potential market volatility. Traders should be ready for a sharp market movement in either direction. One strategy is to buy options straddles or strangles on major market indices like the SPY to take advantage of the expected volatility from these economic releases. The CBOE Volatility Index (VIX) is high at around 22, reflecting the uncertainty among traders regarding the forthcoming data. At the same time, there are growing worries about the tech sector, particularly around AI stocks, which have fueled recent growth. After rising over 400% since early 2023, stocks like Nvidia have already dropped about 15% from their peaks in 2025. Michael Burry’s warning about AI companies potentially misreporting equipment depreciation raises new concerns about their profits being inflated. This scenario presents a clear opportunity to use derivatives to either hedge risks or bet on further declines in the tech sector. Buying long-dated put options on a tech-heavy ETF like the QQQ or on leading AI companies could be a wise approach. This strategy positions investors for a potential reassessment of the entire AI sector if these accounting issues prove true, similar to the downturn witnessed during the DotCom bubble in 2000. Create your live VT Markets account and start trading now.

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