During the week of November 17-21, 2025, US equity markets experienced significant volatility and ultimately finished lower. Major stock indexes all declined despite a sharp Friday rebound driven by renewed rate cut expectations. The S&P 500 fell approximately 1.9-2.0%, the Nasdaq dropped 2.7% for its third consecutive weekly loss, and the Dow Jones declined roughly 1.9%.
Multiple factors contributed to the market turbulence throughout the week. Lingering concerns over high valuations in mega-cap technology and AI-related stocks, particularly Nvidia, created significant selling pressure early in the week. Federal Reserve rate cut uncertainty continued to play a major role. Meanwhile, mixed economic data also influenced sentiment, with September's delayed jobs report showing stronger-than-expected payrolls but an unexpected rise in unemployment to 4.4%, suggesting labor market softening. Additionally, widespread profit-taking led investors to rotate their portfolios.
The US Treasury bond market benefited from the equities weakness, with flight to quality bringing yields 5-10bps lower. The Fed's December rate cut probability increased from 39% to over 70% by week's end, with labor market concerns stemming from rising unemployment. Despite that, corporate credit spreads continued to widen, following the risk-off mode in November.
