Updated: 22-November-25

Wall Street spent the week riding a roller coaster of AI-fueled excitement and valuation anxiety. By Friday’s close, markets were firmly in the red: the S&P 500 dropped 1.95%, the Nasdaq slid 2.74%, and the Dow fell 1.91%. Overseas markets fared even worse, with the MSCI EAFE down 3.25%.

AI Takes Center Stage

The week opened with investors bracing for big Q3 earnings from a major AI megacap. As anticipation mounted, tech stocks stumbled, dragging the S&P and Nasdaq with them. Even the Dow wasn’t spared. With economic data delayed by the recent government shutdown, traders turned to consumer giants for clues on the health of the broader economy. The picture was murky.

Midweek brought a breather. All three major indexes bounced, helped by renewed optimism ahead of another high-profile AI earnings release. That optimism proved justified. Thursday’s opening rally was powered by strong AI results. But the celebration was short-lived.

Fed Uncertainty Lingers

Markets quickly reversed course as Federal Reserve worries resurfaced. October meeting minutes revealed continued internal divisions over future rate moves, and September’s jobs report didn’t help: solid job creation but a rising unemployment rate complicated the outlook.

Friday delivered one last plot twist. New York Fed President John Williams hinted that a December rate adjustment was still on the table, nudging stocks upward despite weak consumer sentiment and manufacturing data.

Jobs Beat… But the Jobless Rate Rises

The long-delayed September jobs report finally dropped: 119,000 new jobs, the strongest monthly gain since April and a sharp turnaround from August’s initially reported losses (later revised to a gain). Yet unemployment ticked up to 4.4%, the highest in four years and above expectations.

With the Federal Reserve set to meet December 9–10, this was the last employment snapshot before policymakers decide their next move.

What Investors Should Be Thinking About Right Now

1. Volatility isn’t a signal...Yet. Choppy markets reflect positioning, not fundamentals. When a handful of AI megacaps can swing entire indexes, it’s worth asking: Is the market reacting to real economic shifts, or just recalibrating expectations?
2. AI leadership stays messy. Big tech is still the market’s power center, but leadership within AI is rotating week to week. Long-term investors should focus less on short-term earnings “beats” and more on which companies are building durable competitive moats (compute, data, distribution, and partnerships).
3. Watch the Fed’s language more than its actions. With policymakers divided and the job market sending mixed messages, the Fed may keep optionality open into year-end. The tone, hawkish, dovish, or conflicted, will likely move markets more than the December decision itself.
4. The labor market is shifting. The rising unemployment rate hints at cooling beneath the surface. This kind of transition often precedes new leadership in the market, outside the familiar mega-cap names.
5. Consumer health is the swing factor. With delayed economic data and weak sentiment numbers, investors should pay close attention to the consumer: retail, discretionary spending, and credit stress. These influence 2026 earnings more than one quarter of AI hype.
6. Volatility creates pricing mistakes. When fear spikes, correlations rise, and solid companies will get punished alongside those that are potentially overvalued. This is when patient investors can find quality assets hiding in broad sell-offs.
7. Expect leadership rotation, but don’t chase it. Transition periods shuffle market leaders. AI megacaps may dominate one month and lag the next. Rather than buying into momentum spikes, focus on companies with improving fundamentals, not just improving stock prices.
8. Maintain balance between defensives and growth. When direction is unclear, portfolios benefit from smart positioning: quality growth (for eventual acceleration) paired with strong cash-flow defensives (for protection in drawdowns).
9. Keep cash/money market as a strategic asset, not an afterthought. Volatile years generate mispricing. Holding modest liquidity on hand allows investors to buy high-quality assets at better valuations when the market overreacts.
10. Remember: Zoom out. This is a transition year. Transition years reward the disciplined, not the reactive. 2025 has been a classic transition year. AI expectations are being reset, the Fed is openly divided, and the government’s data backlog is distorting the economic picture. In environments like this, markets often look directionless or overly reactive. That’s not noise to be afraid of. It’s noise to interpret. 
11. When short-term data is unreliable. Lengthen your decision window. Delayed and revised reports mean weekly swings may reflect data quirks, not real shifts. Instead of reacting to every daily update, evaluate trends on a 3–6 month basis, where the signal-to-noise ratio improves. Historically, periods where economic clarity is lacking give way to strong forward returns once data normalizes. 
    

What to Watch This Week

Economic Data Highlights

• Tuesday: Retail Sales, Case-Shiller Home Prices, Business Inventories, Consumer Confidence, Pending Home Sales
• Wednesday: Jobless Claims, Durable Goods Orders
• Thursday: Thanksgiving – Markets Closed
• Friday: Chicago Business Barometer

Earnings on Deck

• Monday: Agilent Technologies
• Tuesday: Analog Devices, Dell, Autodesk, Workday
• Wednesday: Deere & Co.

_{Source: Zacks, November 21, 2025
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule their earnings reports without notice.}