This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact The Epoch Times Reprints.
A broad sell-off in technology shares led stocks lower this week as investors took profits and weighed new signs of economic weakness.
Despite strong earnings from Palantir, AMD, and Qualcomm, valuation concerns fueled a decline in major indexes. The Dow Jones Industrial Average fell by 1.21 percent for the week to close at 46,987, while the S&P 500 dropped by 1.63 percent to 6,728, after briefly dipping below its 50-day moving average on the afternoon of Nov. 7.
The Nasdaq Composite suffered the steepest loss, down by 3.04 percent—its most significant weekly drop since April, while the Russell 2000 declined by 1.96 percent.
Market volatility climbed for a second consecutive week, with the CBOE Volatility Index, or “fear gauge,” recording a 9.4 percent weekly increase to 19.08.
Stocks opened sharply higher on Nov. 3, boosted by upbeat sentiment carried over from the previous week’s rally. Meanwhile, a flurry of high-profile corporate deals in the artificial intelligence (AI) and consumer sectors also added to investor optimism.
Amazon Web Services (AWS) and OpenAI announced a multi-year partnership valued at $38 billion, under which AWS will supply advanced cloud servers to help OpenAI expand its computing capacity.
Meanwhile, cloud computing firm Lambda signed a multibillion-dollar agreement with Microsoft to develop AI infrastructure powered by tens of thousands of Nvidia GPUs—highlighting robust global demand for high-performance computing.
Outside the AI sector, Huggies-maker Kimberly-Clark Corp. agreed to acquire Kenvue Inc., parent company of Tylenol and Band-Aid, for $48.7 billion, creating a global health and wellness giant with approximately $32 billion in annual net revenue.
However, the rally lost steam by the end of the session as bond yields rose and traders locked in profits.
The yield on the U.S. 10-year Treasury note—a benchmark for mortgages and other long-term loans—hovered near 4.10 percent as markets assessed the Federal Reserve’s next move in December. By the market close, the S&P 500 and Nasdaq edged higher, while the Dow and Russell 2000 finished in the red.
Profit-taking accelerated on Nov. 4 after Palantir released its earnings report. Although the AI software firm posted strong third-quarter results, its high valuation prompted selling that rippled through the broader market.
All major indexes fell sharply, led by declines in the Nasdaq and small-cap Russell 2000. Additional selling pressure came from Uber, despite its earnings beating expectations.
Markets rebounded on Nov. 5, as strong results from AMD and bargain-hunting lifted sentiment. The recovery was further supported by a better-than-expected ADP employment report showing private businesses added 42,000 jobs in October—above market forecasts of 25,000 and reversing September’s revised decline of 29,000 jobs.
Investor optimism for equities was further lifted after Federal Reserve Governor Stephen Miran said during an interview with Yahoo Finance that another rate cut in December “would still be a reasonable action.”
However, the rebound was short-lived. On Nov. 6, technology shares led a new wave of sell-off despite Qualcomm’s upbeat earnings the previous day.
The worse-than-expected Challenger Job Cuts report added pressure, showing that employers cut 153,074 jobs in October—the highest total for that month since 2003. The layoffs were concentrated in warehousing (47,878), tech (33,281), food (10,662), and government (7,883) sectors.
By the closing bell, all major indexes finished in negative territory, with the Nasdaq and Russell 2000 each down by nearly 2 percent.
Further selling occurred on Nov. 7 due to another discouraging economic report.
The preliminary University of Michigan consumer sentiment index declined to 50.3 in November from 53.6 in October, below the expected reading of 53.2. The reading was the second-lowest on record, reflecting growing consumer anxiety about the prolonged federal government shutdown—the longest in history.
Nevertheless, hopes that the shutdown would end over the weekend helped stabilize markets by the close, leaving indexes mixed.
Robert Edwards, chief investment officer at Edwards Asset Management, said the pullback in large-cap tech stocks was both “healthy” and temporary.
“We would characterize the recent pullback in tech as a brief breather, since earnings are crushing it and growing faster than revenues, and that often leads to multiple expansion,” Edwards told The Epoch Times.
“The combination of strong earnings and a Federal Reserve in full-on dove mode, along with trillions of dollars in cash on the sidelines, suggests that after this breather passes, we’re likely to set record highs by New Year’s Eve.”
Glen Smith, chief investment officer at GDS Wealth Management in Flower Mound, Texas, said the weakening labor data could support the Federal Reserve’s next policy moves.
“We think this cooling keeps the Fed’s rate cut plans alive for December and potentially into early 2026,” Smith told The Epoch Times.
He added that year-end momentum could still lift equities.
“The stock market is getting close to its year-end seasonal strength, and while we’ve already seen stocks perform extremely well in recent months, via an early Santa Claus rally, we still expect stocks to grind higher, albeit slowly, between now and the end of the year.”
Panos Mourdoukoutas is a professor of economics at Long Island University in New York City. He also teaches security analysis at Columbia University. He’s been published in professional journals and magazines, including Forbes, Investopedia, Barron's, IBT, and Journal of Financial Research. He’s also the author of many books, including “Business Strategy in a Semiglobal Economy” and “China's Challenge.”
