The shutdown has ended. Winter is usually good for stocks. Here’s why investors are selling.

The stock market cleared a major hurdle this week. It’s the beginning of what is historically a good time for stocks. You wouldn’t know it if you looked at your portfolio today.

President Donald Trump on Wednesday signed legislation to reopen the federal government, ending the longest shutdown in U.S. history. Reopening removes the economic burden from more than 1 million unpaid federal workers and paves the way for federal agencies to release vital economic data again.

However, stocks fell on Thursday, led by the tech-heavy Nasdaq, which ended the day down more than 2% — perhaps a “buy the rumor, sell the news” event, as stocks rose on Monday as the end of the lockdown appeared imminent.

Historically, the end of the lockdown has supported stocks, according to Adam Turnquist, chief technical strategist at LPL Financial. Since 1976, he wrote on Wednesday, which covered 20 shutdowns, the S&P 500 has risen more in the one- and three-month periods after a budget decision than in all other comparable periods.

This shutdown also ends at a time of year that is historically good for the stock market. Since 2000, November has been, on average, the best month of the year for the S&P 500. December, another positive month, often culminates in a Santa Claus surge.

But the mood on Wall Street heading into the end of the year appears gloomier than rosy, as investors debate the existence of an AI bubble and are unsure what incoming economic data will say about the health of the economy.

Bubble fears weigh on technology stocks

The controversy surrounding the artificial intelligence bubble has weighed on technology stocks in recent weeks. Shares of chipmaker Nvidia (NVDA) fell 7% last week, and fell more than 3.5% on Thursday. Palantir (PLTR) stock fell 8% the day after it posted earnings that beat previous estimates and raised its full-year guidance. On Thursday, the majority of the worst-performing stocks in the S&P 500 were companies benefiting from AI such as software company Applovin (APP) and chip maker Broadcom (AVGO).

Concerns about an AI bubble are fueled by soaring valuations in both public and private markets. OpenAI, which doesn’t expect to turn a profit until 2029, is valued at $500 billion. Palantir, even with its recent pullback, trades at about 240 times forward earnings.

The gap between AI spending and AI revenues has also raised eyebrows. Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), Meta (META), and Oracle (ORCL) plan to spend hundreds of billions of dollars to build data centers and fill them with AI-enabled equipment. They have had some success in showing investors that AI contributes to their top and bottom lines, but some investors have become skeptical.

Wall Street has also noticed the shift in how AI investments are funded. Up until this point, tech giants like Microsoft and Amazon have mostly relied on cash flow to build data centers and buy chips. Proponents of the AI ​​bubble have often pointed to the size and stability of these cash flows to defend the sustainability of the AI ​​boom.

Fed rate cut hopes are fading

Investors will also be watching economic data ahead of the Federal Reserve’s final policy meeting of the year next month.

Inflation and labor market reports were delayed by the shutdown, depriving Wall Street and the Fed of vital economic temperature checks. Although the lockdown period has ended, investors are not sure when they will receive this data, if at all. The White House suggested on Wednesday that inflation and labor market data for October may never be published, which will leave policymakers relying on other public and private data sets as they debate whether to cut interest rates for a third time this year in mid-December.

Officials are divided over how to proceed. Some urged caution, citing concerns that inflation, which has returned to acceleration this year, could remain above its 2% target. The data blackout has given officials concerned about inflation more reason to demand slower cuts. Meanwhile, recent private sector data suggests that labor market conditions have deteriorated more than expected this year, giving cautious officials an excuse to demand stronger cuts.

Wall Street increasingly believes that hawks, who favor higher interest rates, have the upper hand. Federal funds futures trading data on Thursday put the odds of a December rate cut at 47%, down from 96% a month ago and 63% yesterday.