Market Recap - Tuesday, November 18, 2025
Tech Weakness Weighs on Market While Small Caps and Defensives Shine
Stocks ended mostly lower today, extending the market’s recent losing streak. The S&P 500 fell 0.83% for its fourth straight down day, while the Nasdaq dropped 1.21% and the Dow slid 1.07%. Small caps bucked the trend, with the Russell 2000 gaining 0.31%, and equal-weighted stocks outperformed their tech-heavy counterparts. The broader risk-off tone persisted, as investors pulled back from Big Tech and AI-related names amid rising skepticism and profit-taking.
Large-cap tech dragged on the market again, with Amazon and Microsoft falling after bearish analyst downgrades, while Google managed gains on fresh AI announcements. Weakness extended to semis, software, payments, housing retail (Home Depot missed), and healthcare stocks. Meanwhile, banks, insurers, cruise lines, and small-caps outperformed, showing some rotation under the surface. Oil rebounded after Trump met with Saudi officials, and Bitcoin recovered modestly.
There were a flurry of headlines and earnings updates. Home Depot posted weak results, citing a lack of storms and tepid consumer demand. Medtronic impressed with strong guidance and upbeat commentary on surgical volumes. Baidu posted solid AI cloud growth, and Alphabet launched Gemini 3.0 with a new AI agent platform. But markets weren’t impressed by the latest AI headlines, with many viewing them as signs of hype and circular investment behavior. Downgrades of Amazon and Microsoft echoed those concerns, questioning the long-term return profile of massive AI capex. Microsoft and Nvidia’s planned $15B investment into Anthropic drew particular attention.
Economic data offered mixed signals. ADP data hinted at labor softening, while the NAHB homebuilder survey improved despite many builders cutting prices. Durable goods orders came in light. On the Fed front, Richmond’s Barkin said inflation may still be too high, but the labor market could be weaker than it seems. The market remains on edge ahead of key catalysts later this week, including Nvidia earnings, Fed minutes, the September jobs report, and November PMI readings.
Here’s Our Take:
Markets remain fragile as a combination of technical breakdowns, cautious Fed commentary, and rising doubts about AI’s near-term payoff continue to weigh on sentiment. Even though earnings growth remains solid and the macro backdrop hasn’t materially deteriorated, the elevated expectations in Big Tech and AI are being tested. The heavy capex commitments by hyperscalers, combined with analyst warnings about overinvestment and debt buildup, are feeding concerns that the AI trade might not deliver the quick returns the market hoped for.
That said, the underlying tone isn’t fully bearish. There’s increasing evidence of rotation into small-caps, value-oriented sectors, and defensive names like healthcare and insurance. This could signal a broadening of market leadership if macro data stays stable. With Nvidia’s results tomorrow and key data on deck, the next few sessions will be pivotal. For now, it’s a market searching for balance - between innovation and earnings discipline, between growth and value, and between hype and reality.
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