Here is Schwab's early look at the markets for Monday, November 10.

Treasury auctions, a few key tech-related earnings reports, and an update from the House of the Mouse, Walt Disney, await investors this week after Wall Street suffered its worst week in a month thanks to a tech-fueled sell-off.

Valuation concerns for AI-related stocks took the tech-heavy Nasdaq Composite down 3% last week and briefly pushed the S&P 500 index below its 50-day moving average for the first time since late April. AI leader Nvidia is down 11% from recent all-time highs as stocks across the chip sector struggle. Meanwhile, the dip buying that characterized selloffs earlier this year didn't immediately come to the rescue, though there were signs of it by late Friday as markets finished well off their lows.

A variety of issues besides AI concerns dogged markets and it's hard to decide which deserves the most blame. Worries about the economic impact of the shutdown likely played a key role. Washington entered the weekend with legislators still scrambling to find a way to re-open the government before Thanksgiving. Holiday travel could put the country in a bind with 10% of flights canceled thanks to lack of pay for air traffic controllers. As of this recording, the shutdown persisted, but reports of a Democratic bid to end it in return for an extra year of Affordable Care Act subsidies lifted stocks from their lows late Friday before news reports of Republicans rejecting it.

"The government shutdown, which has been the longest in history, appears to be denting consumer confidence and there have been more signs of softness in the labor market," said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research.

Additionally, investors are still digesting the Federal Reserve's more hawkish stance and are worried rates won't get cut next month. The market also may have simply been due for a pullback, technically, after the S&P 500 index posted its third-longest stretch in history above its 50-day moving average.. For tech specifically, investors remain focused on heavy spending by firms like Oracle and Meta Platforms, seeking evidence that the outlays will ultimately boost profit. Some investors put the spotlight on capital spending by these firms as a percentage of annual revenue, with Oracle and Meta seen at high levels, CNBC reported late Friday.

The question this week is if dip-buying returns in tech or investors decide to rotate out of some of the more speculative and highly-valued names, perhaps into higher quality tech stocks or perceived areas of safety like Treasuries or the dollar. A resolution to the shutdown is another wildcard for the new week, because it could provide an excuse for investors to buy the dip , Peterson noted.

Whether Treasuries see buying demand could depend on a series of auctions starting early this afternoon with 3-year notes on the block. Wednesday features a 10-year Treasury note auction. The shutdown could raise uncertainty around the U.S. economy, perhaps limiting interest in Treasuries and causing yields to rise. Treasury yields are generally up from before the Fed's last rate cut despite worries about a shaky economy.

Last week saw investors flinch at heavy October layoffs data but encouraged by a better-than-expected private jobs growth report.

Preliminary November consumer sentiment released Friday by the University of Michigan crumbled to 50.3, well below October's 53.6 and far under 71.8 a year ago, though even 71.8 is low by historic standards. Consensus had been 54 for headline sentiment. Long-run inflation expectations, closely watched by the Fed, dipped to 3.6% from 3.9% in October, one bright spot in an otherwise bleak report.

Expectations for a December rate cut were 66% by late Friday, according to the CME FedWatch Tool. But the futures market isn't necessarily right.

"It's important to remember that the Fed only has so much room to cut rates if inflation doesn't come down," said Kathy Jones, chief fixed income strategist, Schwab Center for Financial Research.  
Several Fed speakers line up in coming days, with Wednesday featuring Fed governors Christopher Waller and Stephen Miran.

Earnings this week are sparse, but include heavy hitters like Applied Materials, Cisco, CoreWeave, and Walt Disney.

Investors aren't necessarily rewarding companies that did well.

"What we're seeing in earnings season is a heightened amount of sensitivity," said Liz Ann Sonders, chief investment strategist, Schwab Center for Financial Research, in a recent podcast. "You're seeing companies that miss disproportionately punished, and even the mild beats are not getting terribly rewarded relative to market overall market performance. The stocks that have done incredibly well in the immediate aftermath of earnings season have been the huge beats. So I think the margin of error has changed a bit."

Roughly 90% of S&P 500 companies have reported results, and so far, 67% have beat on the top line while 82% have beat on the bottom line. Revenue growth is 8.19% and EPS growth is 11.75%.

Increasing delays at airports made headlines Friday. However, several major airline stocks rose 2% or more amid hopes of the shutdown being resolved. And it's unclear how much impact the shutdown is having beyond a few obvious places. The Atlanta Fed now sees third quarter gross domestic product, or GDP, growth at a healthy 4%, up from 3.9% previously. Many analysts are less optimistic.

Sector-wise, defensive parts areas stayed in the lead Friday, as they had Thursday. Energy, staples, materials, utilities, and real estate all rallied 1% or more, suggesting rotation into those sectors and out of information technology and communication services, which brought up the rear Friday as they had much of the week. Chip stocks continued to languish Friday, falling 1.4%. Oracle, Advanced Micro Devices, and Super Micro Computer all fell 1% to 2%, even as Nvidia clawed back its worst losses and Palantir climbed, but Marvell Technology shares dove 2.5%.

In other individual stocks Friday, Tesla dropped 3.6% after shareholders approved a $1 trillion pay package for CEO Elon Musk. The package requires him to meet "ambitious goals," the New York Times reported. Shares had climbed to nearly $475 just a week ago but finished the week around $430.

Crypto-related shares rallied Friday as Bitcoin bounced from its flirtation with levels below $100,000 last touched in late June. Bitcoin finished the day up 2.8% but the week down more than 5%.

In chart action Friday, the S&P 500 index scraped below its 50-day moving average for the first time since the end of April but ended well above it. The 50-day now is near 6,670.

"If support doesn’t hold up at the 50-day, this could suggest some more downside price discovery is needed before stabilization," Schwab's Peterson said. "If the SPX can establish support at its 50-day simple moving average…then this could help embolden dip-buying behavior, at least on a near-term basis. However, if not, I think this could foster more profit taking in higher valued areas of the market and stocks could experience additional downside."

The Dow Jones Industrial Average® ($DJI) gained 74.80 points Friday (+0.16%) to 46,978.10; the S&P 500 index (SPX) climbed 8.48 points (+0.13%) to 6,728.80, and the Nasdaq Composite® ($COMP) dipped 49.45 points (-0.22%) to 23,004.54.

For the week, the DJIA fell 1.21%, the S&P 500 index lost 1.63% and the Nasdaq Composite dipped 3.04%, its worst week since April. The benchmark 10-year Treasury yield marched in place Friday, ending the week down just one basis point at 4.09% after some volatile moves.