November 22, 2025 Market Update

Market Recap: Not So Fast

Stocks retreated this week as profit taking and uncertainty about the direction of interest rates left the major market indexes in the red.  Early optimism faded as investors took a harder look at the year’s biggest winners, particularly those who have benefited most from the AI frenzy.  Traders appeared anxious to pull some of their chips off the table as valuation worries grew and questions mounted about whether the push to build AI scale is draining too much capital from corporate balance sheets.

Treasury yields edged lower as the latest U.S. jobs report muddied the outlook for a possible rate cut by the Federal Reserve in December.  Credit markets remained orderly, though investors showed less appetite for lower quality debt after several recent defaults sparked a shift toward safer alternatives.

This week’s market activity suggests that, for now, Mr. Market has become a bit more cautious.  What is less clear is whether that hesitancy will be temporary or the start of a more enduring change in heart.  But as we all know, it doesn’t take much for Mr. Market to throw caution to the wind.

Market Performance

Market Commentary: High Expectations Threatened By Higher Rates.

Investors have spent much of the year focused on the promise of AI, but the bill for building that future has been piling up.  Many of the mega cap companies leading the AI charge have financed their massive investments with equally massive borrowing, and Mr. Market is starting to consider how higher interest expenses could impact their bottom line.

Under normal conditions, rising rates tend to make investors cautious.  Higher borrowing costs pressure earnings, raise discount rates, and weaken financial statements.  That dynamic becomes even more challenging when a handful of mega borrowers’ stocks constitute a record level of the S&P 500’s weight.  When leadership is this concentrated, the market’s fortunes can hinge on whether those companies can comfortably service their debt while continuing to invest at the same pace.

The next Federal Reserve meeting to discuss interest rates is scheduled for December 9–10, 2025.  This will be the last of the eight regularly scheduled meetings for the year, and the Federal Open Market Committee (FOMC) will make its final policy decision then.  Even a hint the Fed might be moderating its current quantitative easing policy could trigger a correction.

In Case You Missed It: Big Tech Is Going Big on Debt.

Bank of America reports that big tech firms have raised about $157 billion in U.S. public bond issuance this year, up roughly 70 percent from last year.