NextFin news, On Friday, November 7, 2025, the SPDR S&P 500 ETF Trust (SPY) closed at $670.97 after touching an intraday low of $661.21, effectively stabilizing just above the critical $667 level closely watched by traders. Concurrently, the technology-heavy Nasdaq and the QQQ ETF underperformed, with the Nasdaq marking its worst weekly downturn since April 2025, dragged by softness in AI leader stocks. The trading landscape was shaped in New York, reflecting a complex interplay of macroeconomic, fiscal, and sector-specific factors impacting U.S. capital markets.
Federal Reserve Chair Jerome Powell publicly stated that a December interest rate cut is “not a foregone conclusion,” signaling a more cautious, data-dependent policy approach. Complementing this stance, Chicago Fed President Austan Goolsbee expressed uncertainty on the December decision, emphasizing inflation progress amid a challenging data environment. Meanwhile, Cleveland Fed President Beth Hammack advocated for a pause in rate cuts, warning that inflation remains the larger risk to the economy. In line with these remarks, futures markets recalibrated, now assigning approximately a 65-71% probability to a 25 basis point rate cut in December, down from over 90% just weeks prior.
Simultaneously, AI-related capital expenditure (CapEx) continues to stun markets. Wall Street estimates indicate that 2025 AI infrastructure investment is surging towards the high-$300 billion to $400 billion band. Citigroup’s forward-looking projections anticipate this figure reaching approximately $490 billion in 2026 and aggregating to $2.8 trillion cumulatively by 2029. Such scale underscores AI's position as an essential driver offsetting broader macroeconomic uncertainties within equity earnings.
The broader macro backdrop contains additional complexity. Investors responded positively to late-week reports suggesting progress in resolving the longest federal government shutdown on record, which has constrained official economic data releases and kept markets in a state of informational vacuum. The benchmark 10-year U.S. Treasury yield hovered near 4.09%, reflecting persistent uncertainty and risk aversion. Of particular note is the upcoming October Consumer Price Index (CPI) release scheduled for Thursday, November 13, 2025, an event anticipated to provide critical clarity influencing the Federal Reserve’s December policy decisions.
This week's movements reflected volatility driven by conflicting forces: SPY and the Dow Jones Industrial Average gained marginally by Friday's close after oscillating during the session, while the Nasdaq faltered on renewed skepticism regarding the sustainability of AI growth stocks. This dichotomy highlights the market's sensitivity to both the Fed’s cautious signals and the underlying strength stemming from technology investment.
The tapering in December rate cut odds is particularly consequential for growth — and long-duration assets, including AI beneficiaries within SPY and QQQ. As interest rate expectations shift, valuation multiples sensitive to discount rates are recalibrating, heightening sector-specific risk.
Meanwhile, the robustness of AI CapEx acts as a stabilizing force. The massive hyperscale infrastructure buildouts led by tech giants continue unabated, serving as a hedge against macroeconomic headwinds. This ongoing investment surge explains why AI-related sectors remain resilient and continue to buoy S&P 500 earnings estimates despite the surrounding uncertainty.
Investor attention now turns to the forthcoming CPI data and any fresh Federal Reserve communications, which will be instrumental in setting the terminal policy stance for the year. Moreover, resolution to the government shutdown could reinstate regular economic data flows, enhancing market transparency and potentially lifting risk sentiment.
Technically, SPY is contained within a near-term trading range defined by a floor near $660–$662 and resistance around $685, with the latter’s breach opening the path toward multi-month highs near $689. Conversely, QQQ's critical psychological support sits at $600 with immediate resistance at $622. These levels serve as tactical markers for short-term market participants gauging sentiment and momentum.
Looking forward, the juxtaposition of booming AI capital investment and a Federal Reserve increasingly divided on the timing of rate cuts presents a complex environment for equity markets. Sustained AI spending is likely to remain a pivotal macroeconomic tailwind, fueling corporate innovation and productivity enhancements, which could support further equity gains. Conversely, the Fed’s cautious stance and the ongoing fiscal uncertainty introduce volatility risks and may temper upside in rate-sensitive sectors.
In summary, SPY’s hold above $667 amid this evolving landscape illustrates resilience grounded in structural technological investment, moderated by policy uncertainty. Market participants would be prudent to monitor upcoming macro releases, Fed communications, and fiscal developments as they navigate the balance between growth optimism driven by AI and the cautious rate outlook shaped by policymakers.
According to the most authoritative report by Reuters and market data aggregators, the intersection of these key factors will define the trajectory of U.S. equity markets heading into the final months of 2025.
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