Market Brief
11/25/25
Market Tearsheet
November 25, 2025 - Holiday Week Trading
MARKET SNAPSHOT & SENTIMENT SHIFT
The fundamental backdrop has changed materially over 72 hours. Following explicit dovish commentary from Fed Governor Christopher Waller and NY Fed President John Williams, the probability of a December rate cut has surged to approximately 80%, up dramatically from 35% last week. This represents the dominant narrative underpinning Monday’s sharp reversal, where the Nasdaq Composite delivered its best day since May with a +2.69% gain. The S&P 500 closed at 6,705.11, up 1.55%, though all three major indices remain in negative territory for November, down 2.14%, 4.04%, and 1.88%, respectively.
The macro environment reflects a clear pivot away from the “higher-for-longer” rate narrative that dominated the market through early November. Commentary from Fed officials emphasizing labor market softness and the need for adjustment has created a three-week window where equity valuations are benefiting from multiple expansion rather than earnings surprise. This is a cyclical phenomenon that historically reverses when data arrives or Fed messaging recalibrates.
Consumer sentiment remains structurally weak, with the University of Michigan Index down to 51.0 from 53.6 in October. Nearly half of survey respondents cite elevated prices as their primary concern, while 26% reference income pressure, the highest read since 2021. This disconnect between a resilient macro economy and deteriorating household-level sentiment creates asymmetric risk if labor weakness accelerates.
EARNINGS FLOW & DATAFLOW AGENDA
Alibaba’s Q2 results this morning validate the AI infrastructure thesis, with cloud revenue accelerating to +34% year-over-year growth from +26% last quarter. The 5% beat on consolidated revenue despite food delivery headwinds suggests core commerce and cloud segments are absorbing margin pressure effectively. Cloud now represents the company’s highest-margin segment and fastest-growing vertical, a tectonic shift from legacy e-commerce. U.S. ADR shares are up 2.5% in pre-market trading.
Keysight’s Monday evening beat and strong FY26 guidance reaffirmed AI infrastructure demand momentum, with the company posting $1.91 in non-GAAP EPS versus $1.87 consensus and guiding Q1 revenue above expectations at $1.53-1.55 billion. Management commentary specifically highlighted sustained data center buildout demand and a $1.5 billion share repurchase authorization signaling internal confidence. The stock spiked +14.8% pre-market.
Today’s earnings cascade includes Best Buy, ahead of open (consensus $1.31 EPS), followed by Analog Devices, Dick’s Sporting Goods, Abercrombie & Fitch, and NIO, before the close. Keysight reported after hours yesterday. Wednesday brings the critical Deere, pre-market report (consensus $3.81 EPS) followed by Dell, and Workday after hours.
Economic data remains the wild card in a holiday-shortened week. September’s PPI and retail sales figures, delayed by the government shutdown, print at 8:30 AM EST today. Consensus expects +0.3% MoM core PPI and +0.4% MoM retail sales. These figures are historical and relatively stale from a market perspective, but they provide the Fed with justification (or contradiction) for its emerging December cut stance. Consumer confidence prints at 10:00 AM. The Chicago PMI and initial jobless claims arrive Wednesday morning.
SECTOR ROTATION & TECHNICAL INFLECTION
Technology has staged a powerful rebound but remains the month’s worst performer, down 4.04% through November despite Monday’s +2.69% bounce. The narrative has shifted from “AI bubble” concerns (which dominated through November 20) to “Fed pivot unlocks valuations” (post-November 23). This type of momentum-driven reversal typically has limited sustainability beyond the initial capitulation relief.
Healthcare has outperformed materially in November, rising approximately 5% while the broader S&P 500 declined 2.14%. Defensive positioning continues to make sense given elevated consumer stress and the thin fundamental improvements that would justify further equity expansion below 6,800 on the index.
The S&P 500 sits precariously below both its 20-day and 50-day moving averages, creating technical overhead at the 6,754 and 6,713 levels, respectively. Immediate resistance sits at 6,770-6,780 (Monday’s intraday high), with the November peak zone at 6,870-6,880 representing secondary resistance. Critical support resides at 6,620-6,650, below which the November low of 6,521 becomes the next target. The 200-day moving average near 6,343 provides ultimate support but is unlikely to test absent a material macro deterioration or Fed policy shock.
The VIX collapsed 12.4% to 20.52 on Monday but remains approximately 20% above October’s average level of 17.5. This indicates that while fear has receded from the 26-plus levels seen last Thursday, elevated anxiety persists relative to the pre-November environment. Mean reversion typically requires either a sharp additional drop (unlikely given Fed tailwinds) or a sustained period of higher mean VIX readings as volatility normalizes.
BROADCOM & THE INFRASTRUCTURE THESIS
Broadcom, emerged as Monday’s primary beneficiary of the AI infrastructure narrative, with shares surging 11.1% to near $275. The investment case rests on its exclusive partnership with Alphabet dating to 2016, through which it manufactures custom Tensor Processing Units (TPUs) representing the seventh generation (”Ironwood”) architecture. Q3 data points confirm Google’s willingness to absorb significant capex: Alphabet’s processing volume reached 1,300 trillion tokens in October versus 480 trillion in April 2025, a 170% increase in six months.
Broadcom’s AI segment generated $5.2 billion in Q3 revenue, expanding at +63% year-over-year with Google orders constituting approximately 60% of demand. The company maintains a $100 billion backlog of AI chip orders, competing primarily with Nvidia, through specialized application-specific integrated circuits rather than general-purpose GPUs. Street consensus targets $300+ on the stock, with 52-week highs near $310.
The risk is straightforward: Broadcom’s bull case is heavily binary on Alphabet’s continued ASIC adoption trajectory. If Google decides to redirect capex toward Nvidia’s H100/H200 platforms or develops internally sufficient TPU capacity, Broadcom faces serious demand destruction. The company’s diversified portfolio provides downside support, but the AI bull thesis would be materially undermined.
POSITIONING & TACTICAL OUTLOOK
Rate cut expectations now dominate the near-term narrative to an uncomfortable degree. The 80% December cut probability leaves minimal room for disappointment, and any Fed commentary suggesting the bank will remain “patient” or take a “meeting-by-meeting approach” (as Waller indicated) could trigger repricing. This is particularly relevant given the delayed data, if September PPI accelerates or retail weakness disappoints, the Fed’s calculus shifts.
We favor a barbell approach through the holiday week: maintain positions in AI infrastructure plays (Broadcom, Alphabet) that benefit from continued capex momentum, while adding tactical hedges through healthcare names or elevated VIX call positions. Broadcom specifically offers both AI exposure and technical setup, though entry discipline matters, waiting for a dip toward $260-265 represents a more favorable risk/reward given the 11% Monday move.
Best Buy earnings this morning serve as a proxy for consumer spending resilience in a holiday-shortened context. The retail sector has exhibited surprising resilience despite consumer sentiment weakness, suggesting either survey methodology issues or material divergence between low/middle income and affluent households. A material miss would confirm the K-shaped economy concern; a beat preserves the “soft landing” narrative.
The broader market stance remains “cautious dip buyer” rather than “aggressive accumulator.” The November correction has provided attractive entry points for fundamental long-term positions, but the risk/reward for new short-term exposure remains unfavorable. Support at 6,620-6,650 should hold if Fed sentiment remains dovish; a break below 6,520 would necessitate tactical portfolio adjustment.
Holiday liquidity conditions warrant heightened attention to overnight risk and geopolitical headlines. Markets close early Friday at 1:00 PM EST, with full closure Thursday for Thanksgiving.
SEQH Capital Partners Research | November 25, 2025 | 6:38 AM EST