Nasdaq Snaps 7-Month Win Streak as Tech Rotation Reshapes November Markets
Nasdaq Snaps 7-Month Win Streak as Tech Rotation Reshapes November Markets
US stocks closed out a volatile November with the Nasdaq Composite snapping a seven-month winning streak—its longest since 2021. The tech-heavy index fell nearly 2% for the month as investors reassessed the AI trade and rotated into more defensive sectors.
Friday's Session: A Strong Finish to a Weak Month
The major indexes posted their fifth consecutive daily gain on Black Friday's shortened session:
| Index | Friday Change | November Change |
|---|---|---|
| Nasdaq Composite | +0.65% | -1.9% |
| S&P 500 | +0.54% | -0.6% |
| Dow Jones | +0.61% | ~0% |
Despite the week's rally, the broader picture tells a different story. The S&P 500's six-month winning streak also came to an end, while the Dow finished roughly flat for November.
What's Driving the Rotation?
Tech Valuations Under Scrutiny
The sharp cooldown in megacap tech names reflects growing investor skepticism about how quickly AI-driven businesses can translate hype into sustainable profits. Nvidia, the poster child of the AI boom, is on track to close November with losses of roughly 12%.
The Alphabet Exception
Not all tech giants suffered. Alphabet emerged as the clear outlier, gaining approximately 13% in November—outperforming every other "Magnificent 7" stock. The rally was driven by:
- Optimism around Google's Gemini AI product
- Growing confidence in its custom AI chips (TPUs)
- Positioning as a credible competitor to OpenAI and Nvidia
Defensive Sectors Gain Favor
Healthcare and other defensive sectors attracted capital as investors sought shelter from tech volatility. This rotation suggests a more cautious stance heading into year-end.
Rate Cut Expectations Fuel Week's Rally
The week's strong performance was largely driven by renewed confidence in a December rate cut. Fed funds futures now price in over 80% odds of a 25 basis point cut at the December 17-18 FOMC meeting.
Dovish commentary from Federal Reserve officials throughout the week reinforced expectations that policymakers are ready to ease monetary policy further.
Wall Street's 2026 Outlook: Targets as High as 8,000
As November wraps up, major banks are releasing their 2026 forecasts:
| Bank | S&P 500 Target | Key Drivers |
|---|---|---|
| Deutsche Bank | 8,000 | Earnings growth, buybacks, AI momentum |
| JPMorgan | 7,500 (upside to 8,000) | Fed rate cuts, continued expansion |
| HSBC | 7,500 | Moderate growth, stable valuations |
Deutsche Bank's bullish call for "mid-teens returns" is predicated on stronger inflows, corporate buybacks, and continued earnings momentum. S&P 500 companies grew earnings by 13.4% in Q3, according to FactSet.
CME Outage Disrupts Global Trading
Friday's session was briefly complicated by a technical outage at the CME Group. A cooling system failure at CyrusOne data centers halted trading in futures and options across multiple markets, including:
- US Treasury futures
- Crude oil futures
- S&P 500 and Nasdaq 100 futures
Trading resumed around 8:30 a.m. ET after the issue was resolved.
Black Friday Retail Boost
E-commerce stocks led the market on Black Friday as holiday shopping kicked into high gear:
- Amazon and Target both rose 1.3%
- Walmart added 1%
- Chewy gained 1.4%
Adobe estimates consumers will spend $253 billion during the holiday shopping season, with $6 billion already spent on Thanksgiving Day alone.
What This Means for Investors
Near-Term Considerations
- December rate cut likely - Markets are pricing in high probability of easing
- Tech rotation may continue - Defensive sectors could outperform near-term
- Earnings reactions more severe - Companies missing estimates are being punished harder than usual
Positioning for 2026
The Wall Street consensus points to continued gains, but the path may be bumpier than 2024-2025:
- Diversification matters - Don't overweight any single sector
- Quality over hype - Focus on companies with proven earnings, not just AI promises
- Stay invested - Despite volatility, the long-term trend remains positive
The Bottom Line
November's rotation out of tech and into defensive sectors signals a maturing market that's becoming more discerning about valuations. While the AI theme remains intact, investors are demanding proof that investments translate into profits.
With Wall Street targeting S&P 500 levels of 7,500-8,000 by end of 2026, the outlook remains constructive. But the easy gains may be behind us, and stock selection will matter more in the year ahead.
This article is for informational purposes only and does not constitute investment advice. Past performance does not guarantee future results.