A government shutdown. A weakening labor market. Stubborn inflation.

None of it has seemed to matter for the stock market. At least not yet.

Stocks ended slightly lower on Tuesday, marking the first downturn in over a week. The broad S&P 500 and tech-centric Nasdaq indexes have each achieved over 30 record closings this year. Futures were slightly up on Wednesday morning.

Amidst other economic sectors showing stress, the stock market gains are sparking worries about an economy where the wealthiest U.S. households continue to prosper, while lower- and middle-income families struggle.

“It points out the bifurcation of the economy,” said Steve Sosnick, chief strategist at Interactive Brokers financial group.

Two forces have been driving much of the market’s recent runup: artificial intelligence investments, and the prospect of lower interest rates.

Sosnick highlighted calculations indicating that spending on AI infrastructure development, such as data centers, is significantly driving this year’s economic growth.

However, this spending hasn’t translated into substantial new job creation for the overall economy: 2025 is on track to be among the worst years for new payroll additions this century. The government shutdown has postponed the release of official September jobs data, but on Tuesday, private equity firm Carlyle noted its internal metrics suggested the U.S. added just 17,000 new payrolls last month. Additionally, a report from payroll processor ADP indicated a marked slowdown in the jobs market.

Nevertheless, the AI surge has enhanced stock investors’ wealth. According to data referenced by Barron’s investment magazine, the seven tech giants known as the “Magnificent 7” accounted for about two-thirds of the S&P 500’s 3.65% rise last month and have driven around 41% of the index’s nearly 15% increase this year.

“I think there’s always a little bit of K-shaped nature to the economy,” Sosnick said. “But it went from looking like a small ‘K’ to a capital ‘K.’”

Meanwhile, economic uncertainty shows no signs of letting up.

Typically, government shutdowns have a minimal effect on markets and the economy. However, this shutdown might differ. As it progresses into its second week, the White House has begun to hint at mass layoffs, while former President Donald Trump and other GOP leaders question the necessity of issuing back pay. Given that government expenditure remains a substantial part of the economy, the implementation of either of these scenarios could impact economic growth.

Trump also continues to roll out tariff plans, only to delay their implementation. The latest example is a proposed tariff on imported trucks that was slated to go into effect Oct. 1, before it was delayed a month.

The recent weak jobs data have been enough for the Federal Reserve to conclude that it must lower interest rates to support hiring. Investors now put the odds that the central bank will announce at least two more rate cuts at its final two meetings this year at more than 80%. Yet some Fed members also remain concerned about the pace of inflation, which remains well above the central bank’s 2% target. Carlyle also found the inflation rate hitting as much as 3.3% in the services sector last month.

The worsening jobs data is likely to exacerbate the economy’s bifurcated nature if lower rates continue to result in stronger stock gains, Sosnick said. A lackluster “real” economy and a booming stock market “can coexist for quite some time,” he said. On Tuesday, the New York Federal Reserve said consumer expectations had deteriorated, with worsening outlooks for both the labor market and inflation.

Tuesday’s stock decline could be a warning, however. The market appeared to be derailed by a report from online news outlet The Information that questioned whether one of the key players in the recent AI runup, Oracle, has the ability to successfully finance its commitment to purchase chips from another AI heavyweight, Nvidia.

Some tech analysts had already grown concerned about the circular nature of the AI investment cycle that’s begun to give the impression that the same funds are simply being passed back and forth among the same handful of companies. A representative for Oracle did not respond to a request for comment about the story.

Although the story was solely focused on Oracle, Sosnick said it had pulled the rest of the market down Tuesday because it suggested other companies whose stocks have benefited from AI may also be facing similar difficulties.

With the beneficiaries of the current economic environment already proving increasingly narrow, it wouldn’t take much for a turn in their fortunes to set off a broader downturn, said Mark Zandi, chief economist at Moody’s Analytics.

“It feels like the economy is right on the precipice, and it wouldn’t take much to push it over edge,” he said. “It feels very tenuous and vulnerable, and any little thing that doesn’t stick to script could cause it to go into a recession.”