The U.S. shutdown has ended but the hangover is just beginning for investors, who worry gaps in economic data will delay or even derail Federal Reserve rate cuts at a delicate moment for the stock market.

Concern drove the heaviest selloff for the rate-sensitive Nasdaq in a month on Thursday on the heels, a week ago, of its largest weekly drop since April. The index, which has soared this year with booming AI shares, is down about 5% from October's peak.

Blue-chip bourses from Tokyo to Paris and London were deep in the red while U.S. stock futures pointed to further falls for Wall Street shares on Friday.

Even gold and bitcoin were not spared, the latter hitting lows near $96,000 last seen in May.

The problem is an information vacuum that spans from futures positioning to crop estimates and in particular jobs and price figures, some of which weren't collected during the 43 days of shutdown and are unlikely to ever be published.

There is doubt about the publication of October's inflation data and the employment report won't include the jobless rate, White House economic advisor Kevin Hassett said, because the household survey from which it is calculated wasn't conducted.

'DRIVING IN THE FOG'

This matters for markets because Federal Reserve Chair Jerome Powell has likened the situation to "driving in the fog" and flagged that policymakers are likely to "slow down" in response, or in other words hold rather than cut interest rates.

Expectations for a 25-basis point rate cut in December, seen as a sure thing a month ago, are down to about 50% according to CME's FedWatch tool, and it's making high-flying markets jittery.

"We've obviously had a huge rally in the market from the April trough, and it's pretty much been uninterrupted," said Matt Sherwood, head of investment strategy at Perpetual in Sydney.

"(It) requires Fed rate cuts and sustained easy financial conditions to justify what I think are extreme valuations."

As of Wednesday, the forward price-to-earnings ratio for the S&P 500, based on earnings estimates for the next 12 months, stood at 22.8 times, well above its 10-year average of 18.8, according to LSEG Datastream.

Together with year-to-date gains above 20% in hard-running sectors such as technology, it also doesn't take much for investors to want to lock in some gains.

Already the mood has turned fickle and darlings such as Palantir and Oracle have logged losses around 15% this month. Chipmaker Nvidia is down nearly 8%.

In early Friday trades, Applied Materials stock was down more than 6% and Nvidia was down 3.2%. Broadcom, Intel and Advanced Micro Devices fell between 2% and 4%.

Nvidia's results next week are critical, given the stock has been at the fore of the record-breaking stock rally this year.

"We're at a time of year here where any kind of downside might ripple a little bit further in certain sectors that have really put up big numbers this year, as you're going to have some trigger fingers to take some profits off the table," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

FLYING BLIND INTO 2026

During the shutdown, the data void shot previously little-followed private surveys to prominence and painted a mixed picture of the economy where spending appears to be holding up but, on some measures, layoffs have surged.

Investors have struggled to draw conclusions and have stuck with expectations for at least three cuts by the end of 2026 to take rates to 3%.

Analysts say that's likely to face pressure, especially as a growing number of policymakers — which this week grew to include San Francisco Fed President Mary Daly and Minneapolis Fed President Neel Kashkari - are sounding reticent on rate cuts.

"The Fed is flying blind as we are," said Bob Savage, head of markets macro strategy at BNY in New York.

"The more interesting debate and the one that no one has any clarity on is what happens in 2026," he said, with the "dot plot" or policymakers' forecasts for rates, likely to get even more focus than their rate decision.

"Their expectations about growth, their expectations about jobs really matter."

To be sure, there are plenty of investors who see recent drawdowns as a rough patch in a rally that has further to run as AI investment booms.

But it could be bumpy for a while. The behavior of the U.S. dollar, which has been falling along with stocks, may suggest global money is flowing away from the U.S.

And bitcoin, which turned out to be a lead indicator of market weakness earlier in the year, is floundering below $100,000.

"The market may have some rockiness between now and Thanksgiving," said Michael Schulman, partner and chief investment officer at Running Point Capital Advisors.

"There's a lot of people waiting for things to untangle."