Three big themes are shaping the financial narrative this week, and they all feed into each other. Inflation is finally behaving, the AI sector is at a turning point, and tech stocks are sitting on levels that could swing the market into the new year. Put together, it feels like we’re shifting from “Is inflation under control?” to “Are tech valuations real, or is something about to crack?”

The September PCE report landed exactly where the Fed wanted it. Core PCE—the measure they actually care about—came in at 2.8% year-over-year, matching expectations and edging down from August.

Why does that matter?
Because this is the number the Fed uses to decide if they can start easing up. And right now, inflation looks… steady. Not falling off a cliff, but not heating up either. The monthly reading was also right on target at 0.2%.

A quick breakdown:

Nothing dramatic here—just an economy cruising at a manageable pace.

And markets loved it. Stocks rallied, and rate-cut odds for December are sitting around 87%. Translation → the Fed finally has wiggle room without fear of another inflation flare-up. Investors are absolutely here for it.

The vibe?
Inflation isn’t “solved,” but it’s no longer the main antagonist. The Fed can cut, and the market knows it.

We’re officially in the “everyone has an opinion” phase of AI investing. Corporate AI spending hit $252 billion in 2024, yet the real-world adoption curve is slower than the hype cycle. So here are the three realistic paths forward:

This is the Google-in-the-dot-com-era scenario: inflated spending now, real value later.

Here's the positive case:

If this plays out, today’s “expensive” valuations eventually look justified.

Not a crash. A correction.

Here’s what’s raising eyebrows:

This scenario looks like valuations slowly settling into reality—not disaster, just deflation.

Worst-case, AI becomes 2008 housing-level interconnected.

Why this matters:

Not the most likely scenario… but it’s on the radar for a reason.

Don’t go all-in on any single outcome.
The winners will be:

AI exposure? Yes.
AI overexposure? Not so much.

The Nasdaq 100 is basically at a “prove it” level right now.

Here’s the quick technical recap:

That’s quietly bullish.

RSI near 61 means the index has room to move either direction without being overheated. And most major indicators are still skewing buy-side.

The game plan for traders:

Sometimes the strongest markets are the ones that pause, reset, and build a clean base before the next move. That’s exactly what this structure looks like.

Put all three narratives together, and you get a market trying to balance optimism and caution at the same time.

Opportunity is absolutely there—but so is risk. The smartest portfolios going into 2026 will be the ones that stay exposed to innovation without leaning so heavily into tech that a correction wipes out gains. Think balance, not bets.

We’re heading into a stretch where the market decides whether this is a breather before another leg up… or an early signal that leadership is shifting.

Either way, staying informed and diversified is the play.