Market snapshot: stocks suffer large losses amid investor rethink

Optimism has been fuelled by AI and interest rate cuts, but is the narrative changing? ii's head of markets talks through the triggers for this pullback.

14th November 2025 08:21

by Richard Hunter from interactive investor

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US stocks endured a bruising session with emerging signs that the investor narrative is changing, as opposed to any clear deterioration in fundamentals.

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Two of the major drivers for this year’s rally have been a renewed appetite for the AI trade and anticipation of interest rate cuts. However, of late investors have been shuffling uncomfortably in their seats with AI spending going into overdrive, the success of which will not become apparent for some time, and the stretched valuations which have resulted from the relentless buying interest.

The Nasdaq bore the brunt of the latest uncertainty, led by declines in the likes of NVIDIA Corp (NASDAQ:NVDA), Alphabet Inc Class A (NASDAQ:GOOGL) and most recent market darling Palantir Technologies Inc Ordinary Shares - Class A (NASDAQ:PLTR). In addition, there was also a reminder that sentiment is skittish as The Walt Disney Co (NYSE:DIS) shares fell by almost 8% following a mixed set of fourth-quarter numbers.

At the same time, concerns increased that despite the government shutdown having ended, the result may be that the lack of economic data which has left the Federal Reserve dealing blind may not reappear before its next meeting in December. As such, investors considered that the Fed may therefore decide to play safe and stay put on interest rates until full visibility is restored. Comments from several Fed members that monetary policy should remain restrictive led to a dip in the market consensus for a cut, dropping to a 50/50 chance from what had been all but nailed on just two weeks ago.

There is no immediate respite from this circumspect investor attitude with Dow futures currently pointing to a weaker open later, albeit at a very early stage. Another acid test will follow next week when Nvidia reports its latest results, with expectations sky high and therefore vulnerable to negative shocks.

For all the current doubt, what could prove to be the start of a healthy correction has done little to change the overall performance of the leading indices. In the year to date, the Dow Jones is up by 11.5%, while the more tech-focused S&P500 and Nasdaq have added 14.5% and 18.4% respectively.

Asian markets followed suit overnight, with tech stocks at the forefront of the selling pressure. There was also a stark reminder, if it were needed, that the Chinese economy continues to wade through treacle. Factory output grew by just 4.9% in October, below the expected 5.5% and down from 6.5% the previous month. Ongoing weakness in property and fixed asset investment was only partially offset by a retail sales reading, which edged above estimates with a gain of 2.9% and a marginal dip in urban unemployment.

Having been seen as a source of haven investment for the majority of this year, the FTSE100 was unable to dodge the bullets of receding investor optimism and added to its own losses from yesterday with a languid opening. The previous outperformers of the rally such as the banks and the miners led the declines, with the housebuilders not far behind given the lack of buying activity which has become very evident in recent weeks ahead of what could be a punishing Budget.

Burberry Group (LSE:BRBY) was a rare outlier after a broker upgrade lifted the shares by more than 2% adding to yesterday’s gain on its half-year numbers, but the mood was exemplified by BP (LSE:BP.) and Shell (LSE:SHEL), which both struggled to make progress regardless of a spike in the oil price.

Despite the persistent weakness of the last couple of trading sessions, the FTSE100 remains ahead by 18.7% in the year to date, and in terms of valuations such a performance could yet tempt some buying on the dip for the steeliest of investors.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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