The stock market just can’t catch a break heading into the Thanksgiving holiday. Next week’s shortened holiday week — the stock market is closed Thursday and open half a day on Friday — could prove volatile. November is historically a strong month for stocks, but the major averages suffered an ugly slide since the month began as the air came out of the AI bull market amid questions over stocks’ sky-high valuations. And, with trading volume likely to slow next week and few major catalysts expected before the December Federal Reserve meeting, the month’s final stretch may be bumpy. Adding to the market’s worries is Thursday’s alarming pullback. Stocks initially rallied after Nvidia’s blowout earnings were reported late Wednesday, and as delayed jobs data for September came in better than feared, reviving hopes that the AI trade would be strong enough to give the market a final burst of strength toward year’s end. Instead, a late-day reversal on Thursday, followed by a big rally on Friday after the head of the New York Federal Reserve left the door open to a December interest rate cut , has traders uncertain of what’s coming next. “A reversal of this magnitude suggests that positive sentiment is waning, and investors are using the post-earnings pop in Nvidia’s stock as an opportunity to take profits,” wrote Charlie Ashley, portfolio manager at Catalyst Funds after the Thursday move. “If this is the beginning of a deeper correction for equities, it makes the December Fed decision substantially more important,” Ashley said. “If the Fed decides to hold rates, the cost of capital will be another headwind for equity valuations.” .SPX 5D mountain S & P 500, 5-day performance By mid-day Friday, markets were suddenly pricing in higher odds that the Federal Reserve will lower rates another quarter percentage point at its last policy meeting of the year on December 10. Trading in interest rate futures implied almost a 75% chance of easier policy, up from 39% Thursday and about 44% a week ago, according to the CME FedWatch Tool . The benchmark Fed lending rate today is 3.75% to 4.00%. Adding to uncertainty is the up-in-the air quality of government economic data. On Friday, traders learned that the Fed won’t get key inflation data before its next rate decision as the Bureau of Labor Statistics scrapped the release of October’s consumer price index. November’s CPI data, previously scheduled to be released Dec. 10, will now be released on Dec. 18 after the Fed decision, the BLS said. For now, both bulls and bears are watching the market’s next move. Mounting concern that hundreds of billions of dollars pledged to AI investment represents an AI bubble, and may turn out to be unprofitable, has grown in recent weeks. Some strategists have reacted by urging investors to trim technology holdings and adopt a defensive posture in an expensive market. Others remain bullish on stocks, pointing to the transformative potential of AI, the resilient U.S. economic expansion and continued growth in consumer spending thanks to high-income shoppers. “The market’s reaction to Nvidia and to the payroll report was universally positive, and that selling off is very different behavior of the market than we’ve seen over the last six months. It’s almost always going the opposite, where there’s sell offs and then recoveries through the day,” said Mark Hackett, chief market strategist at Nationwide. Previously, “it hasn’t looked like this, which is buy, and then sell the rally.” “So, [it’s] too early to say that we’ve moved into a new regime,” Hackett continued. “But it is a new piece of information that we have to pay attention to.” In late day trading Friday, the major averages were headed for a losing week. The Dow Jones Industrial Average was lower by some 1.3% on the week and the S & P 500 was off 1.2%. The tech-heavy Nasdaq Composite suffered the steepest loss, falling 1.8%. Week ahead calendar All times ET. Monday Nov. 24 Earnings: Agilent Technologies, Keysight Technologies Tuesday, Nov. 25 Earnings: Best Buy , Analog Devices , J. M. Smucker , HP , Workday , Autodesk , NetApp , Dell Technologies Wednesday, Nov. 26 Thursday, Nov. 27 NYSE closed for Thanksgiving Day. Friday, Nov. 28 NYSE closes early at 1 p.m. ET for the Thanksgiving holiday.
Wall Street heads into Thanksgiving week with questions over AI trade, Fed rate cut
Nov 21, 2025
