Weekly Commentary for the week ending November 8, 2025
U.S. equity indexes closed lower, with the technology-heavy Nasdaq Composite leading the decline. The Russell 1000 Growth Index underperformed its value counterpart by 288 basis points—the widest margin since February—as elevated valuations and renewed scrutiny of artificial intelligence (AI) spending pressured growth-oriented names that have propelled markets since early April.
Broader sentiment was also weighed down by the ongoing federal government shutdown, now the longest on record. While prior headlines had minimal impact, coverage intensified this week, including the Federal Aviation Administration’s order to reduce flight traffic amid air traffic controller shortages. Investors also grappled with the absence of key government data and its potential drag on GDP growth.
Private-Sector Data Fills the Void
With official releases halted, alternative sources took center stage. ADP reported 42,000 private-sector jobs added in October—a rebound after two months of declines—but hiring remained uneven. Professional services, information technology, and leisure/hospitality shed jobs for the third straight month, while wage growth stalled.
Thursday’s Challenger, Gray & Christmas report was more alarming: employers announced 153,074 job cuts in October—the highest for the month since 2003. Year-to-date cuts total nearly 1.1 million, up 65% from 2024 and 44% above all of last year. This should assist the Fed's decision in reducing interest rates going forward!
Sector PMI: Services Expand, Manufacturing Contracts
The Institute for Supply Management delivered a split verdict. The Services PMI rose to 52.4 in October from 50.0, signaling expansion, with new orders hitting their highest level since October 2024. Eleven industries reported growth, up from ten in September.
Manufacturing, however, contracted for the eighth straight month, with the PMI slipping to 48.7 from 49.1, driven by declines in production and inventories.
Consumer Sentiment Hits 2022 Lows
Friday’s preliminary University of Michigan Consumer Sentiment Index fell 3.3 points to 50.3—the lowest since June 2022. Current personal finances dropped 17%, and year-ahead business expectations fell 11%. The shutdown was explicitly cited as a key concern. Inflation expectations for the next year ticked up to 4.7% from 4.6%.
Fixed Income: Treasuries Rally, High Yield Lags
U.S. Treasuries posted gains, with short- and intermediate-term yields falling and long-term yields rising slightly. Municipal bonds matched Treasuries despite heavy issuance, supported by month-end cash flows and firm secondary trading. High-yield bonds, however, underperformed amid equity weakness and risk-off flows.
November Starts with an AI Reality Check
Equity markets stumbled out of the gate in November, triggered by skepticism over AI valuations. While AI remains a transformative force, its concentration in a handful of mega-cap stocks has amplified volatility. The Magnificent Seven have surged 190% since ChatGPT’s 2022 debut, lifting the S&P 500 by 75%—but the top 10 stocks now represent over 40% of the index’s market cap.
NVIDIA, the AI ecosystem’s linchpin, briefly surpassed $5 trillion in market value—larger than five S&P 500 sectors, 60% of the Russell 2000, half the STOXX 600, and exceeding Germany’s GDP.
Bubble or Sustainable Growth?
Early 2000 Dot-com comparisons are inevitable, but key differences stand out:
- Profitability: Today’s leaders generate robust earnings and cash flow; 2000’s rally was driven by speculative startups.
- Funding: AI capex is largely self-funded, not debt-fueled like late-’90s telecom.
- Valuations: Elevated but not extreme—profits, not multiples, are driving gains.
- Monetary Policy: The Fed is cutting rates, unlike the tightening cycle that ended the dot-com boom.
Third-quarter earnings reinforce the narrative: 82% of S&P 500 companies beat estimates (vs. a 5-year average of 78%), with the index on pace for 12% growth—its fourth straight double-digit quarter. Tech delivered 22% earnings growth, and the Magnificent Seven (five reported) continued raising AI spending guidance, reflecting both demand and competitive necessity.
AI and the Labor Market
A cooling jobs picture has been this year’s macro pivot, prompting September’s rate cut. Private data shows stabilization but persistent weakness. Challenger noted AI as the second-most cited reason for October layoffs (behind cost-cutting), linked to 6% of year-to-date cuts. A St. Louis Fed study found generative AI adoption correlated with rising unemployment in tech-heavy roles—software developer openings are down 75% from post-pandemic peaks—while personal services remain resilient.
History suggests short-term displacement gives way to broader productivity-driven job creation. We expect the same dynamic here.
Positioning in an AI-Driven Market
November’s pullback feels like a healthy sentiment reset after seven straight Nasdaq gains. Fundamentals remain intact: earnings are accelerating, AI spending is strategic, and the Fed is easing. We maintain an overweight to U.S. large-cap equities but have trimmed exposure to reflect valuation risks.
WealthTrust's positioning: As noted in last weeks update, WealthTrust has reduced exposure to equities and added liquidity by adding to cash and short term treasury positions to take advantage of buying opportunities resulting from previously anticipated volatility.
Key Recommendations:
- Diversify beyond AI: AI is a durable growth engine—avoid overconcentration. Diversification as indicated below remains the best hedge in a concentrated market.
Our AI Target Sector Allocation below is based on AI momentum sector trend analysis and AI news analysis
DBS Long Term Growth Top Ten and Benchmark Weekly Performance:
DBS Long Term Growth Portfolio Top Ten Holdings and Valuation Statistics:
Bottom Line
This week’s performance reflects heightened valuations, not fundamental erosion. AI’s long-term potential is undiminished, but concentration risks are real. Maintain disciplined exposure to innovation while broadening across sectors, styles, and regions. In a fast-evolving market, balance is your edge.