Key TakeawaysTech stocks had a volatile week, selling off sharply on Thursday and regaining ground on Friday, while some of the market’s more recent laggards rallied.It’s unlikely that a single piece of news sparked the fluctuations, though investor concerns are mounting about the pace corporate borrowing to finance the AI buildout.Despite a week of noisy headlines, US stocks remain up 15% for the year.

Stocks whipsawed this week, with the biggest swings coming from the red-hot tech sector. The Morningstar US Technology Index soared more than 2.5% on Monday, but that momentum was short-lived. Tech stocks plunged 2.43% on Thursday but recovered some ground Friday, ending the week up 0.20%.

The Morningstar US Market Index closed on Friday with a weekly loss of 0.09%, offset by gains in the healthcare and energy sectors, as jitters in tech weighed heavily on the broader market. It was real-time evidence of the concentration risk that’s been on Wall Street’s mind for the past two years.

“When tech faces headwinds, it has an outsized impact on the market indices we all follow,” says Dominic Pappalardo, chief multi-asset strategist for Morningstar Wealth. “It’s the phenomenon we’ve been warning people about.”

At the same time, some of the market’s recent laggards saw outsize gains as tech struggled. Healthcare stocks climbed 3.60% for the week, while energy stocks rose 2.53%.

Consumer cyclicals saw the worst returns with losses of 2.60%. Even after days of volatility, tech stocks ended the week roughly flat.

What Caused the Market Selloff?

As has been the case for much of the past few months, no single piece of news appeared to drive the market’s action this week. “Looking at any week in isolation is challenging,” Pappalardo says. That’s especially true given that stocks hit an all-time high at the end of October.

Unfolding in the background was the longest government shutdown in history. Its end looked likely when markets opened on Monday morning and became official by Thursday morning. Also top of mind for Wall Street was a significant repricing of the odds of a December interest rate cut from the Federal Reserve, which dropped from a near certainty just a few weeks ago to roughly 50% amid increasingly hawkish comments from Fed officials and the disruption of government jobs and inflation data.

On its own, Pappalardo says one month of missing data is unlikely to alter the picture very much. But “if [data disruptions] become a reason for the Fed not to cut in December, then [they] could compound into something that does impact markets.”

It’s also possible that the normal process of rebalancing among major funds and institutional stockholders contributed to the movement in the market this week, according to Pappalardo. “Most funds and managers don’t necessarily want to wait until the very end of the year” to adjust their asset allocations.

Tech Stocks Lead Declines

Overall, the noisiest headlines this week came from the tech sector, amid worries that the artificial intelligence companies which have led the market rally for months will not be able to deliver on investors’ lofty expectations for profits and share price growth.

Those worries persisted even against the backdrop of robust third-quarter earnings, which analysts said revealed no signs of waning demand for the infrastructure that powers AI applications.

Pappalardo says that growing concerns about the enormous borrowing mega-cap tech firms have announced to fund AI infrastructure projects may be weighing on investor sentiment. “That’s not a new development, but it has ramped up recently, and there’s always a cumulative effect,” he says. With more debt and less cash on hand, the margin of error for these firms to meet investor expectations is shrinking.

Bottom Line for Investors

After a breathless trading week like this one, Pappalardo reminds investors to zoom out. Just six weeks out from the end of the year, the US stock market is still up 15% for the 2025—roughly double the average annual return on a historical basis. “It’s been a good year,” he says. “Some leveling off now is OK.”

Douglas Porter, chief economists at BMO Capital Markets, echoed that sentiment. “The market wobble needs to be kept in perspective,” he wrote in a Friday research note. “So far, this has mostly been a micro correction in the tech sector, with the Nasdaq now down by roughly 4% from its late-October peak (and still up almost 20% year-over-year),”

In general, strategists say the fundamentals that have driven stocks higher this year remain in place. “With the Fed likely to cut rates further and tech companies reporting strong earnings, we maintain our view that the equity bull market is intact,” wrote Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management, in a note to clients on Friday.