New York, U.S. – November 14, 2025 – Investors are grappling with heightened uncertainty in U.S. financial markets following the partial government shutdown, which has left gaps in critical economic data. Analysts warn that this “data fog” could delay or derail anticipated Federal Reserve interest rate cuts, creating turbulence for markets already sensitive to changes in monetary policy.

The fallout was evident on Thursday, when the Nasdaq Composite (.IXIC) experienced its steepest daily decline in a month, extending the index’s recent pullback from October highs. After surging this year fueled largely by booming AI stocks, the Nasdaq is down roughly 5% from its October peak, reflecting investor caution amid incomplete data.

Data Gaps Fuel Market Anxiety

During the 43-day government shutdown, essential economic surveys—ranging from employment statistics to price indexes—were either delayed or canceled entirely. White House economic advisor Kevin Hassett noted that the October employment report will omit the jobless rate because the household survey was not conducted. Similarly, publication of inflation data remains uncertain.

The information void has left investors uncertain about the pace and timing of Fed rate cuts, which are typically informed by accurate employment, inflation, and growth metrics. Federal Reserve Chair Jerome Powell likened the situation to “driving in the fog,” signaling that policymakers are likely to proceed cautiously, potentially holding rates steady rather than cutting.

Market Implications

Expectations for a 25-basis point rate cut in December have been reduced to approximately 50%, according to CME’s FedWatch tool, creating jitters in previously high-flying sectors. According to LSEG Datastream, the forward price-to-earnings ratio for the S&P 500 stands at 22.8, well above its 10-year average of 18.8, suggesting valuations are stretched.

Tech and AI-related stocks, which led this year’s rally, have been particularly volatile. Companies like Palantir (PLTR.O) and Oracle (ORCL.N) have seen declines of around 15% in November, while Nvidia (NVDA.O) is down nearly 8%. Analysts caution that investors may be taking profits amid high valuations and uncertain Fed policy.

Flying Blind Into 2026

Private surveys and alternative economic indicators have gained attention during the data blackout, offering mixed signals: while consumer spending appears resilient, layoffs have reportedly increased in certain sectors. Investors continue to anticipate at least three rate cuts by the end of 2026, targeting a policy rate of 3%, though this outlook is increasingly uncertain.

Officials including San Francisco Fed President Mary Daly and Minneapolis Fed President Neel Kashkari have recently expressed caution about future rate cuts, emphasizing the need for clarity on economic growth and employment trends before adjusting policy.

Market observers also note that external indicators, such as the falling U.S. dollar and weakness in Bitcoin, may reflect broader shifts in global investment flows away from U.S. assets. Analysts like Michael Schulman, CIO at Running Point Capital Advisors, suggest that investors may face continued volatility through the holiday season as the market digests incomplete economic data and Fed signals.

Outlook

While some investors view recent pullbacks as a temporary pause in an otherwise strong rally, uncertainty around economic data and monetary policy is likely to keep markets jittery. High valuations, coupled with the ongoing “data fog,” suggest that the coming months could see periods of increased volatility for U.S. equities, particularly in rate-sensitive and technology-driven sectors.