Defensive Sector Rotation Dominates US Equities: Weekly Market Analysis (Ending Nov17,2025)

This analysis is based on ValuEngine’s weekly market summary [5] published on Nov18,2025. Over the week ending Nov17,2025, tech-heavy ETFs like QQQM (-3.14% WoW [0]) and the Technology Select Sector SPDR Fund (XLK) (-4.02% WoW [1]) declined significantly, breaking QQQM’s 10-consecutive positive Monday streak [4]. Defensive sectors showed resilience: Consumer Staples Select Sector SPDR Fund (XLP) gained +0.44% WoW [3], while Utilities Select Sector SPDR Fund (XLU) remained nearly flat (+0.01% WoW [2]). Volume trends indicated investor rotation: defensive ETFs (XLP ~89.98M shares, XLU ~56.22M) had higher trading activity than QQQM (~30.23M [0-3]).

Causal factors include: (1) Valuation concerns in the AI space (Michael Burry’s comments on Big Tech accounting [4]); (2) Fed policy uncertainty (56% chance of holding rates in December per Kalshi markets [4]); (3) Delayed economic data due to the 43-day government shutdown [4]; and (4) The S&P500/Nasdaq100 breaking their 198-day streak above the50-day moving average [4].

1. Cross-Domain Correlations
   : Tech sector declines may impact semiconductor stocks like NVDA (reporting earnings Nov19 [4]) and upstream tech (MU, WDC [4]). Defensive sectors benefit from rate-cut expectations but face elevated valuations (e.g., Walmart/Costco at high P/E ratios [4]).
2. Systemic Effects
   : The rotation reflects broader market concerns about overvaluation in growth sectors and macroeconomic uncertainty, which could persist if key catalysts (NVDA earnings, Fed minutes) do not align with bullish expectations.
3. Sentiment Shift
   : The break of the 50-day moving average streak signals a transition from bullish to cautious sentiment, with investors prioritizing capital preservation over growth.

• Tech Earnings
  : NVDA’s Q3 earnings (Nov19) may exacerbate tech declines if results miss expectations [4].
• Fed Policy
  : A hawkish Fed stance (no rate cut in December) could further pressure growth stocks [4].
• Defensive Valuations
  : Consumer staples and utilities trade at elevated valuations, increasing downside risk [4].

• Defensive Resilience
  : Defensive sectors may continue to outperform if uncertainty lingers, though investors should monitor valuation levels.
• Catalyst Monitoring
  : Key events (NVDA earnings, Fed minutes, retail earnings) offer windows to assess market direction.

• ETF Performance
  : QQQM (-3.14% WoW), XLK (-4.02% WoW), XLP (+0.44% WoW), XLU (~0% WoW).
• Volume Trends
  : Higher trading activity in defensive ETFs indicates investor rotation to lower-risk assets.
• Causal Factors
  : AI valuation concerns, Fed uncertainty, delayed economic data, and technical signal breaks.
• Key Catalysts
  : NVDA earnings (Nov19), Fed minutes, retail earnings (WMT Nov20, TGT Nov21), and 10-year Treasury yield.

This analysis provides objective context for decision-making without prescriptive investment recommendations.