Markets enter a holiday-shortened Thanksgiving week reeling from a brutal 1.9% S&P 500 decline as the Fed’s hawkish pivot and volatile rate cut expectations—swinging from 30% to 72% probability within 48 hours—triggered the most aggressive hedging demand in three years with put/call skew reaching extreme levels and the VIX surging to 28 before settling at 23. Despite Nvidia crushing expectations with record $57 billion revenue (+62% year-over-year) driven by $51.2 billion in data center sales, the semiconductor giant’s earnings failed to prevent the third consecutive weekly decline for the Nasdaq and fourth straight red week for the Russell 2000 as systematic de-risking triggered billions in mechanical selling across index futures.
The week unfolds against extraordinary data confusion as the shutdown backlog leaves October unemployment and CPI unreleased—data that couldn’t be collected—while Tuesday delivers delayed September retail sales, PPI, and business inventories creating a surreal environment where investors analyze three-month-old economic conditions. Bitcoin’s collapse below $85,000 from October’s $125,000 record represents a $1.2 trillion crypto market capitalization loss over six weeks, yet S&P 500 companies posted record 13.1% net profit margins—the highest since FactSet began tracking in 2009—creating a paradox where corporate profitability peaks amid market deterioration and defensive sector rotation into Healthcare, Consumer Staples, and Communication Services.
Previous Week Recap
U.S. equities suffered a brutal week with the S&P 500 declining 1.9% while the Nasdaq sustained its third consecutive weekly drop (-2.7%) and the Russell 2000 logged its fourth straight red week. The Dow posted its first negative week after touching fresh record highs, demonstrating broad-based weakness as defensive rotation accelerated into Communication Services, Healthcare, and Consumer Staples while Technology, Consumer Cyclical, and Energy lagged sharply.
Nvidia’s record-shattering earnings—$57 billion revenue representing 62% year-over-year growth and 22% quarter-over-quarter acceleration driven by $51.2 billion data center sales (+66% YoY)—failed to provide market support despite the company’s massive index weighting. The AI infrastructure spending acceleration that Nvidia’s results demonstrated couldn’t overcome Fed hawkish pivot concerns and labor market data confusion from the backlog of delayed reports.
Thursday’s delayed September jobs report showed 119,000 payrolls—more than double the forecast—yet unemployment rose to 4.4%, the highest since October 2021, creating mixed signals that triggered aggressive hedging demand. Put activity logged its third-highest print of the year while total option volume climbed toward record levels, with normalized put/call skew reaching the highest levels seen in the past three years as dealers held less gamma support particularly on the downside.
December Fed rate cut probability experienced wild swings, plunging to approximately 30% on Wednesday before surging to 72% by Friday afternoon following a Fed voting member’s speech. This volatility in rate expectations—combined with the VIX spike to 28 Thursday before retreating to 23 Friday—created extraordinary uncertainty that drove mechanical selling as systematic strategies de-risked across ES, NQ, and RTY futures.
Key Events This Week
Monday – November 24
No major economic reports scheduled
Pre-Thanksgiving positioning and volume decline
Assessment of previous week’s defensive rotation sustainability
Bitcoin weakness monitoring after falling below $85,000
Tuesday – November 25
8:30 AM ET: Retail Sales (September – Delayed) – Previous: 0.6%
8:30 AM ET: Retail Sales Ex-Autos (September – Delayed) – Previous: 0.7%
8:30 AM ET: Producer Price Index (September – Delayed) – Previous: -0.1%
8:30 AM ET: Core PPI (September – Delayed) – Previous: 0.3%
9:00 AM ET: S&P Case-Shiller Home Price Index (September) – Previous: 1.6%
10:00 AM ET: Business Inventories (August – Delayed) – Previous: 0.2%
10:00 AM ET: Consumer Confidence (November) – Forecast: 93.4 vs. 94.6 prior
10:00 AM ET: Pending Home Sales (October) – Forecast: 0.0% vs. 0.0% prior
Heavy data day with multiple delayed September reports
Wednesday – November 26
8:30 AM ET: Initial Jobless Claims (November 22) – Forecast: 225,000 vs. 220,000 prior
8:30 AM ET: Durable Goods Orders (September – Delayed) – Previous: 2.9%
8:30 AM ET: Core Durable Goods (September – Delayed) – Previous: 0.4%
Early market close at 1:00 PM ET ahead of Thanksgiving
Final positioning before holiday weekend
Thursday – November 27
Thanksgiving Holiday – U.S. financial markets closed
No trading or economic releases
Friday – November 28
9:45 AM ET: Chicago PMI (November) – Previous: 43.8
Early Market Close: 1:00 PM ET – Black Friday shortened session
Light trading volume and positioning assessment
Weekly performance evaluation amid data confusion
Major Themes This Week
Nvidia Earnings Failed to Inspire
Nvidia’s demolition of expectations with $57 billion revenue (+62% YoY, +22% QoQ) and $51.2 billion data center sales (+66% YoY) represents one of the most impressive earnings reports in market history, yet the stock and broader indices failed to rally, signaling fundamental market structure problems. The company’s position as one of the heaviest weights in both S&P 500 and Nasdaq 100 means every earnings beat or miss has outsized index impact, yet this beat couldn’t overcome macro concerns.
The Microsoft-Nvidia-Anthropic announcement of $15 billion expanded partnerships with Anthropic committing to $30 billion in Azure compute purchases powered by Nvidia AI systems should have reinforced AI infrastructure thesis strength. Instead, markets focused on Fed policy uncertainty and labor market confusion, suggesting AI enthusiasm may have peaked or requires consolidation before advancing further.
Fed Rate Cut Whipsaw Creates Chaos
The violent swing in December rate cut probability from approximately 30% Wednesday to 72% Friday—triggered by a single Fed voting member’s speech—demonstrates how fragile market conviction has become around monetary policy direction. The 10-year Treasury yield decline from 4.15% to 4.06% reflects this repricing, yet the uncertainty itself created more problems than the direction provided solutions.
The Fed’s hawkish pivot despite strong corporate earnings and record profit margins suggests officials remain more concerned about inflation persistence than market stability or employment weakness. This prioritization creates policy risk where data-dependent decision-making becomes unpredictable amid the shutdown-created information vacuum, particularly with October unemployment and CPI uncollectable and unreleased.
Extreme Hedging Demand and Volatility Surge
Put activity’s third-highest print of the year combined with total option volume approaching record levels demonstrates professional money’s aggressive positioning for downside protection. Normalized put/call skew reaching the highest levels in three years while dealers hold reduced gamma support—particularly on the downside—creates conditions where modest selloffs can accelerate through mechanical de-risking.
The VIX surge to 28 Thursday before retreating to 23 Friday represents meaningful volatility expansion from the previous week’s sub-20 close. Many expected volatility to reset lower after NFP and Nvidia earnings provided clarity, but the opposite occurred as thin liquidity amplified moves and systematic strategies triggered billions in mechanical supply across ES, NQ, and RTY futures.
Bitcoin Collapse and Crypto Winter
Bitcoin’s fall below $85,000 from October’s $125,000 record—now at seven-month lows—represents one of the most dramatic cryptocurrency collapses in recent years, with the broader crypto market shedding approximately $1.2 trillion in capitalization over six weeks. This decline challenges narratives that Fed rate cuts and quantitative easing shifts would benefit alternative assets, suggesting instead that crypto correlates with speculative risk appetite that’s currently evaporating.
The crypto weakness coinciding with equity market defensive rotation and elevated volatility suggests investors are de-risking across all speculative asset classes rather than rotating between them. This broad risk-off sentiment creates headwinds for growth-oriented strategies and validates concerns about bubble-like conditions in multiple markets simultaneously.
Record Profit Margins vs. Market Decline Paradox
S&P 500 companies’ record 13.1% net profit margin—the highest since FactSet began tracking in 2009 and exceeding the previous Q2 2021 record of 13.0%—creates a fundamental paradox where corporate profitability peaks amid market deterioration. The seven consecutive quarters of margin expansion demonstrates pricing power and operational efficiency, yet markets price in deterioration rather than celebrating strength.
This disconnect suggests markets look through current earnings strength to anticipate future margin compression from tariffs, wage pressures, or demand destruction. The defensive sector rotation into Healthcare, Consumer Staples, and Communication Services while Technology, Consumer Cyclical, and Energy lag sharply reinforces this forward-looking pessimism despite backward-looking fundamental excellence.
Data Confusion from Shutdown Backlog
The extraordinary situation where October unemployment and CPI data won’t be released because they couldn’t be collected creates an unprecedented information vacuum for Fed policy-making and market analysis. Tuesday’s flood of delayed September reports—retail sales, PPI, business inventories—forces investors to analyze three-month-old economic conditions while current conditions remain opaque.
The absence of Q3 GDP estimates compounds confusion about economic trajectory, while the Thanksgiving holiday further disrupts release schedules. This data chaos benefits no one—not markets seeking clarity, not the Fed attempting data-dependent policy, and not corporations trying to plan amid uncertainty about actual economic conditions versus outdated snapshots.
Positive Corporate Developments Ignored
Significant positive corporate news—GE Appliances shifting washer/dryer production from China to Kentucky with $150+ million in new U.S. supplier contracts, Eli Lilly becoming the first healthcare company ever to cross $1 trillion valuation, Berkshire Hathaway disclosing 17.8 million Alphabet shares purchased in Q3, Adobe’s $1.9 billion Semrush acquisition, FAA lifting flight restrictions benefiting airline stocks—failed to provide market support.
The market’s inability to react positively to reshoring wins, corporate milestones, Buffett’s Alphabet endorsement, strategic acquisitions, and regulatory relief signals that macro concerns overwhelm micro positives. This dynamic suggests markets won’t stabilize until Fed policy clarity emerges or data confusion resolves, regardless of corporate execution quality.
Bottom Line
This holiday-shortened week represents a critical reassessment period where last week’s brutal 1.9% S&P 500 decline and Nvidia’s failure to inspire despite record-crushing earnings expose fundamental market structure fragility. The violent swing in December rate cut probability from 30% to 72% within 48 hours demonstrates how unstable conviction has become around Fed policy direction, with the 10-year Treasury yield decline to 4.06% from 4.15% providing little comfort amid elevated volatility.
Nvidia’s $57 billion revenue (+62% YoY) driven by $51.2 billion data center sales (+66% YoY) represents one of history’s most impressive earnings reports, yet the stock’s inability to support broader indices signals AI enthusiasm exhaustion or consolidation need. The Microsoft-Anthropic-Nvidia $15-30 billion partnership announcements that should have reinforced infrastructure thesis strength couldn’t overcome macro uncertainty dominating investor psychology.
The most aggressive hedging demand in three years—with put activity at the year’s third-highest level and put/call skew at three-year extremes—combined with VIX surging to 28 before retreating to 23 demonstrates professional money preparing for additional downside. Dealers holding reduced gamma support particularly below current levels creates conditions where systematic de-risking can trigger billions in mechanical selling across index futures as seen last week.
Bitcoin’s collapse below $85,000 from October’s $125,000 record—now at seven-month lows representing $1.2 trillion in crypto market cap evaporation—challenges narratives that Fed easing benefits alternative assets. Instead, the crypto winter coinciding with equity defensive rotation suggests broad risk-off sentiment across all speculative asset classes rather than rotation between them.
The paradox where S&P 500 companies post record 13.1% profit margins—the highest since FactSet began tracking in 2009—amid market deterioration reveals forward-looking pessimism about margin sustainability. Defensive sector rotation into Healthcare, Consumer Staples, and Communication Services while Technology, Consumer Cyclical, and Energy lag demonstrates investors price in future compression from tariffs, wages, or demand destruction rather than celebrating current strength.
Tuesday’s flood of delayed September data—retail sales, PPI, business inventories—creates the surreal situation where markets analyze three-month-old conditions while October unemployment and CPI remain uncollectable and unreleased. The absence of Q3 GDP estimates and Thanksgiving’s additional schedule disruption leaves Fed policy-making and market analysis operating with unprecedented information deficits that benefit no participants.
Investors should prepare for light holiday week volumes that could amplify moves in either direction, with Tuesday’s delayed data providing opportunities for volatility around stale information while Wednesday’s early close and Friday’s shortened session limit trading windows. The week’s outcomes will largely determine whether defensive rotation and hedging demand represent temporary positioning or precede more significant deterioration as markets await December Fed clarity.
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