Market Update – November 17th, 2025
Financial Markets
Stocks started the week on solid footing but moved lower as concerns over stretched tech valuations weighed on sentiment. The federal government reopened after a record-breaking 40+ day shutdown, though funding only runs through the first month of the new year, leaving the door open to another potential shutdown early next year. As of Friday, November 14th, the Nasdaq Composite slipped 0.45%, the S&P 500 was nearly flat at 0.08%, and the Dow Jones Industrial Average gained 0.34% as investors favored value names.
Market News
Tech Sell -Off
Technology stocks experienced a choppy week as investors grew concerned about potential bubble-like conditions in AI and technology-related names. It served as a reminder that the same high-beta, high-momentum names that have driven much of this year’s rally can also reverse quickly.
In a market that hasn’t seen a meaningful pullback since the short-lived pullback in the spring, it can be easy to forget that volatility includes downside risk as well as upside. Some degree of choppiness is natural given how long the market has gone without a more prolonged cooling-off period.
Another source of uncertainty came from questions around the appropriate useful life of technology equipment, a factor that significantly affects depreciation assumptions and, ultimately, reported earnings for the major tech platforms. Because this era of hardware and AI-driven infrastructure is so new, companies themselves often lack clarity.
Microsoft, for example, disclosed in its latest annual filing that its computer equipment lasts anywhere from two to six years, a range wide enough to materially influence company fundamentals. These unknowns around the speed of this technological revolution create real potential for variability in earnings and intrinsic value, for better or for worse.
The recent pullback has been noticeable across the industry. AIQ, the Global X Artificial Intelligence & Technology ETF, is now down 5.5% from its all-time high on October 31st, reversing fairly quickly over just a two-week period. Some clarity may come this Wednesday afternoon when NVIDIA reports earnings, given its outsized influence on AI sentiment.
While current indicators do not suggest the market is on the cusp of a major downturn, weeks like this underscore the importance of staying risk-aware, disciplined, and flexible in an environment where sentiment can shift rapidly.
Bitcoin Bear Market
Bitcoin saw similar weakness last week, entering a bear market after falling 24% from its October 7th highs as risk-off sentiment took hold. The largest cryptocurrency tends to attract many of the same risk-seeking investors active in mega-cap technology names, keeping the two themes closely linked. After last week’s sell off, Bitcoin is now up less than 2% year-to-date and has returned to levels last seen in May.
Monetary Policy Uncertainty
With more than 40 days of minimal federal economic data due to the shutdown, markets are feeling increasingly uncertain about the likelihood of a December rate cut. The lack of data has left the U.S. economic picture unusually incomplete, though some of the delayed data should begin to trickle out in the coming weeks. In the meantime, stable state-level initial claims and fairly strong corporate earnings have helped to provide some visibility into current conditions.
Still, with the heightened uncertainty due to the lack of federal-level data, futures markets have sharply reduced the odds of a December rate cut, which dropped from 66.9% a week ago to 45.75% as of Friday. Accordingly, the probability of no cut has risen from 33.1% to 54.25%.
These expectations will likely continue to shift quickly in one way or another once federal data begins flowing again starting with this week’s missed September jobs report expected to come out this Thursday, with the odds of a rate cut likely to fall further if the labor market appears to be in solid shape.
Source: CME Group FedWatch, as of 11/14/25
Earnings Update
With 92% of S&P 500 companies now having reported Q3 results, earnings season has come in stronger than expected. 82% of companies have posted an upside surprise on EPS and using a blend of what’s been reported and expectations for the remaining 8%, the S&P 500 is on track for 13.1% annual earnings growth and 8.3% revenue growth.
Leadership has come from information technology, utilities (boosted by higher electricity demand tied to tech infrastructure), as well as financials, materials, and industrials. The fact that many of these are cyclical sectors is a constructive sign for the economy for now.
Even with questions around elevated valuations and tech depreciation schedules, earnings and revenues have broadly beaten expectations, setting up a fairly supportive fundamental backdrop into year-end. All eyes now turn to Nvidia’s report on Wednesday afternoon, which should offer clearer insight into the strength of AI demand and help determine whether the recent volatility in technology names was simply noise or something more meaningful.
Summary
Stocks drifted lower last week as stretched tech valuations, a choppy AI selloff, uncertainty around depreciation assumptions, and lingering fallout from the record shutdown weighed on sentiment, with Bitcoin also sliding into a bear market. With rate-cut odds slipping and earnings generally strong, investors are looking to Nvidia’s Wednesday report for a clearer read on the health of AI demand and whether recent volatility was a brief pullback or something more lasting.
We appreciate your continued trust.
Thank you,
Joseph M. Maas,
CFA, CFP®, ChFC, CLU®, MSFS, CCIM, CVA, ABAR, CM&AA
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