S P 500 Ai Fatigue Meets All Time High Streak Seeking Alpha

Bonisiwe Shabane

-Dec 2, 2025, 11:40 PM

s p 500 ai fatigue meets all time high streak seeking alpha

Fears of an AI bubble fueled volatility in recent weeks as big tech valuations stretched and Wall Street’s top executives warned of a market correction. The S&P 500’s AI-led rally sent prices to I am Steven Cress, Head of Quantitative Strategies at Seeking Alpha. I manage the quant ratings and factor grades on stocks and ETFs in Seeking Alpha Premium. I also lead Alpha Picks, which selects the two most attractive stocks to buy each month, and also determines when to sell them. Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given that any particular security, portfolio, transaction or investment strategy is suitable for any specific person. The author is not advising you personally concerning the nature, potential, value or suitability of any particular security or other matter.

You alone are solely responsible for determining whether any investment, security or strategy, or any product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. Steven Cress is the Head of Quantitative Strategy at Seeking Alpha. Any views or opinions expressed herein may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. The S&P 500 (SPX) has been on an exhilarating ascent, repeatedly smashing through record highs, fueled largely by an insatiable appetite for artificial intelligence (AI) innovation and robust corporate earnings. As of October 7, 2025, the benchmark index continues to bask in optimism, with its year-to-date gains hovering around 15-17%.

However, beneath the surface of this impressive rally, a chorus of technical indicators and historical comparisons are beginning to sing a cautionary tune, suggesting that the market's winning streak may be approaching a point... Investors are now grappling with the delicate balance between undeniable technological advancement and the potential for a significant market recalibration. The current market rally, which has seen the S&P 500 achieve its best Q3 performance since 2020, rising by over 7.8%, is undeniably rooted in the transformative power of artificial intelligence. Companies across various sectors are pouring massive investments into AI infrastructure, with technology giants like Nvidia (NASDAQ: NVDA) reportedly reaching a staggering $4.5 trillion market valuation, leading the charge. This AI-fueled enthusiasm has propelled the market to new peaks, even as the Federal Reserve has embarked on an easing cycle, cutting interest rates by 0.25% in Q3 2025—the fourth such reduction since September... These cuts are largely a response to a softening job market, including a July jobs report showing a significant miss on employment gains and a rising unemployment rate.

Despite the prevailing bullish sentiment, which has pushed the CNN Money Fear & Greed Index into the "Greed" zone, several technical and analytical signals are flashing red. On October 4, 2025, the S&P 500's price action formed a "topping tail" candlestick pattern, a classic indicator where strong buying pressure is ultimately overcome by significant selling, suggesting a potential exhaustion of upward... Furthermore, the Relative Strength Index (RSI) across daily, weekly, and monthly charts has entered "overbought" territory (above 70), indicating that the market may be stretched and vulnerable to a pullback. Hedge fund legend Paul Tudor Jones has even drawn parallels to the dot-com bubble of the late 1990s, warning of a potential "blow-off" top driven by speculative behavior, particularly within the AI sector. The timeline leading to this precarious moment includes a period of robust corporate earnings, with Q3 2025 S&P 500 earnings growth estimated at a healthy 7.9% to 8.0% year-over-year, defying initial expectations of a... The Information Technology sector, in particular, boasted an estimated 20.9% growth rate.

However, amidst this earnings strength, inflation readings have crept higher in Q3 2025, partly due to new tariffs imposed by President Trump in April 2025, which initially caused a sharp, albeit temporary, 12% drop... The ongoing partial U.S. government shutdown, while initially shrugged off by markets, adds another layer of uncertainty, with potential GDP implications if prolonged. Key players in this dynamic include the Federal Reserve, whose monetary policy directly impacts liquidity, and the dominant technology companies whose performance heavily influences the index. A potential slowdown or correction in the S&P 500's winning run would undoubtedly create a divergence between market segments, leading to clear winners and losers. Companies that have been at the forefront of the AI rally, particularly those with high valuations and aggressive growth projections, could face the most significant headwinds.

Tech giants and other high-growth stocks that have been largely responsible for the index's ascent may see their valuations scrutinized more intensely, especially if the broader market sentiment shifts from "Greed" to "Fear." Investors...

S P 500 Ai Fatigue Meets All Time High Streak Seeking Alpha

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