Published November 28, 2025
Market volatility shot higher recently only to just as quickly subside. Delta Research outlines the reasons for the volatility and subsequent settling.
“The flight path of the S&P 500, which had been steadily climbing since May, hit some turbulence in November. On November 20, the intraday high-low range was 236 points (~3.5%). Investor anxiety around interest rates, consumer spending and the durability of the AI investment cycle rose. That doubt, combined with seemingly elevated valuations and a lock-in profits mentality, created selling pressure.
The chart below shows the probability of various interest rates after the Federal Reserve meeting on December 10th. The light green represents a short-term interest rate of 3.50-3.75%. The yellow section represents a 3.75-4.00% rate, just a 0.25% tick higher in rates. From this summer to the end of October, the probability of an interest rate cut at the December Fed meeting increased from only 20% to a 100% certainty. Then things abruptly changed. The selling pressure noted above shows up as the spike in the yellow segment on the right-hand side of the chart. The certainty of a December rate cut fell apart with the probability from investors falling all the way back down to only 30%. A couple of Fed Governor comments supporting a cut and … From about 30% last week, the market-implied odds of a December 10 Fed rate cut to 350-375 (area in green) climbed back to 84% – closer to levels the probability was before the last Fed meeting on October 29.
Following Walmart’s better-than-expected results last week, Dick’s Sporting Goods, Best Buy, Abercrombie & Fitch, Burlington Stores, Ross Stores, and TJX all posted beats. Even The Gap reported better-than-expected results. The holiday shopping cycle looks to be in good shape.
Nvidia grew sales 62% year-over-year and earnings 65% year-over-year in its most recent quarter and raised guidance. Revenues are projected to increase by over 75% in 2026. The secular AI super-cycle story appears to be on track.
Turbulence sellers in November are likely to be buyers in December. We do not expect significant fundamental news between now and year end to upset the generally benign economic outlook. The path looks clear for the S&P 500 to stick a third consecutive year of double-digit returns.”
Market Update
Stocks fell -1% to begin the week as a selloff in cryptocurrency and a downgrade of some computer hardware companies weighed on the high-flying AI sector. Investors were focused on market heavyweight Nvidia’s earnings due out Wednesday night. A downgrade to Amazon and Microsoft added further to the fresh negative sentiment toward AI stocks Tuesday sending markets down another -1%. Of note, an AI deal between Nvidia, Microsoft and AI developer Anthropic had no positive impact on the stocks. It was the type of deal that was sending shares zooming higher only a few weeks ago. In other sectors, Home Depot’s earnings failed to excite buyers with the stock falling -6%. Stocks rose +0.4% Wednesday ahead of Nvidia’s report as the company’s stock added +3% in anticipation of a strong report. After the bell, the report did not disappoint with the company posting extraordinary gains in sales and profit. The earnings sent stocks higher +2% at Thursday’s market open. But it all came undone as the day progressed. Stocks sold off hard throughout the session in a stunning reversal to leave the Nasdaq down -2.4% on huge volume. Bitcoin continued plunging with the crypto down -30% in just over one month’s time. After being up +5%, Nvidia closed down over -3%. Outside the selloff in tech shares, other sectors were much less effected; leaving something for bulls to feel better about. Good earnings from Walmart helped provide support for non-tech investors. Further weighing on stocks perhaps was the release of September’s labor report showing good growth in employment while the unemployment rate also rose to 4.4%. The mixed report kept the picture muddled for possible future Fed rate cuts. Stocks got a reprieve Friday as one Fed governor called for lower interest rates. The comments sent rates notably downward helping stocks to bounce back to a +1% recovery.
Stocks broke down through a key moving average trendline this week leaving the S&P 500 (SPY) down -1.92%. The Nasdaq 100 (QQQ) slumped -3.09%. Small caps (IWM) recovered to a relatively benign -0.79% weekly move.
Warm wishes and until next week.