After the longest shutdown on record, the U.S. government has reopened and federal agencies are rushing to publish a backlog of delayed economic data.

Yet the administration warned that key indicators — most notably October jobs and inflation figures — may be permanently compromised, due to a lack of data collection during the closure.

This has left the Federal Reserve in a cautious position heading into its December policy meeting, with several Fed members claiming that the battle against inflation is far from over.

Rate cut odds have swung sharply, with markets now seeing the likelihood of a 25-basis-point cut or a hold as evenly split.

On Wall Street, after the Dow Jones Industrial Average hit fresh record highs on Wednesday, the momentum reversed sharply on Thursday as AI stocks led a tech sell-off, triggered by growing investor anxiety over supply-side constraints.

The spark came from CoreWeave Inc. ( CRWV ) , the AI cloud infrastructure firm whose third-quarter results missed expectations. Management warned of infrastructure delivery delays, noting that the demand for its platform was far outpacing the ability to build and deploy new capacity.

"There is no entity that has the capacity to be able to deliver infrastructure globally in order to meet the demand that’s being driven by the largest technology companies in the world, by the largest AI labs in the world, by government, by enterprise. All of these things are coming to bear," CoreWeave's ( CRWV ) CEO Mike Intrator warned.

Investors interpreted the update as a structural issue in the AI sector — what some analysts are now calling the "backlog paradox": unprecedented demand with no clear timeline for fulfillment. Shares of CoreWeave ( CRWV ) — which had rallied 240% prior to earnings — tumbled 25% on the week.

Read also: The AI Bubble Is Bursting, But Not For The Reason You’d Think

Meanwhile, sectors tied to domestic demand and real economy activity, including health care and autos, show relative strength as optimism around consumer spending rebounded following the government reopening.

Eli Lilly Co. and General Motors Co. ( GM ) have been among the biggest gainers over the past month, both up about 25%.

GM shares rallied to record highs near $73 on Thursday, capping a streak of seven straight daily gains before easing slightly on Friday. The Detroit automaker continues to ride the momentum from a better-than-expected quarterly report released in October, along with positive guidance for the rest of the year.

Year-to-date, GM is now up 33%, far ahead of the S&P 500's 14% and the Nasdaq 100's 18% gains.

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Image created using artificial intelligence via Midjourney.