Technology Sector Market Reversal Analysis: November 2025 Correction Driven by Banking CEO Warnings

This analysis is based on the ValuEngine Weekly Market Summary and Commentary [1] published on November 11, 2025, which reported a dramatic market reversal during the first trading week of November 2025, ending the technology sector’s leadership that had powered returns through October.

The market reversal was triggered by bearish commentary from major banking executives at the Global Financial Leaders’ Investment Summit in Hong Kong on November 4, 2025. Goldman Sachs CEO David Solomon predicted “a 10% to 20% drawdown in equity markets sometime in the next 12 to 24 months,” while Morgan Stanley CEO Ted Pick suggested investors should “welcome the possibility” of 10-15% drawdowns [2]. These warnings sparked immediate global market declines, with technology and growth ETFs bearing the brunt of the selloff.

• QQQM (Invesco NASDAQ 100 ETF) declined 3.5% for the week, falling from $260.23 to $251.06 [0]
• XLK (Technology Select Sector SPDR Fund) dropped 4.6%, declining from $301.91 to $288.16 [0]
• Global markets reacted sharply: Japan’s Nikkei 225 fell 1.74%, South Korea’s KOSPI dropped 2.37%, and European STOXX 600 declined 1.41% [2]

The selloff demonstrated classic sector rotation patterns, with defensive sectors gaining while growth suffered. Energy (XLE +1.6%), Consumer Staples (XLP +1.4%), and Financials (XLF +1.2%) posted modest gains [1]. Value outperformed growth significantly, with Vanguard Value ETF (VTV) gaining 0.2% while Vanguard Growth ETF (VUG) lost 3.8% [1].

This correction appears more than typical profit-taking, occurring at the intersection of elevated valuations (XLK P/E: 40.98, QQQM P/E: 34.90) [0], Fed policy uncertainty, and emerging systemic risks in private credit markets. UBS Chair Colm Kelleher warned about “looming systemic risk” in private credit due to lack of effective regulation [2].

The correction extended beyond equities, with Bitcoin (IBIT) plunging 10.3% in what ValuEngine described as “resembling a textbook correction rather than a ‘store of value’” [1]. Meanwhile, gold (GLDM) showed resilience, losing only 0.3% [1], indicating investors sought traditional safe-haven assets.

Trading volume patterns suggest institutional investors drove the decline. QQQM volume peaked at 6.88 million shares on November 4 versus its 4.15 million average [0], while XLK volume surged to 12.4 million shares on November 6 compared to its 9.06 million average [0].

The ongoing U.S. government shutdown has delayed economic data releases, forcing investors to rely on less reliable private sector information [2]. This information gap may exacerbate market reactions to available data and increase volatility.

• Valuation Concerns:
  Technology sector valuations remain elevated despite the correction, suggesting further downside potential if earnings growth fails to justify current multiples
• Systemic Risk Exposure:
  Private credit market vulnerabilities could create contagion effects, particularly through banks’ insurance company relationships [2]
• Fed Policy Uncertainty:
  Two Federal Reserve officials indicated they were undecided about December rate cuts [2], adding to market volatility
• Earnings Season Pressure:
  With over 400 companies reporting earnings, disappointing results could exacerbate the selloff

• Defensive Sector Strength:
  Energy, Consumer Staples, and Financials demonstrated relative strength, suggesting potential rotation opportunities
• Value Over Growth:
  The outperformance of value ETFs indicates a potential longer-term shift in market leadership
• Entry Points:
  The correction may create attractive entry points for quality technology companies with strong fundamentals if the selloff proves overdone

Users should be aware that the convergence of high valuations, Fed uncertainty, and emerging systemic risk concerns in private credit markets may significantly impact market stability in the coming months. The warnings from major banking CEOs suggest this correction could be more than a typical profit-taking event.

The early November 2025 market reversal represents a significant shift in market dynamics, ending the technology sector’s dominance through October 2025. The correction was triggered by credible warnings from major banking executives and amplified by existing concerns about valuations, Fed policy, and systemic risks. While defensive sectors and value investments showed relative strength, the technology sector’s elevated valuations and the broader risk-off sentiment suggest caution is warranted. The ongoing government shutdown creates additional uncertainty by limiting access to reliable economic data. Market participants should monitor Fed policy developments, private credit market stress indicators, and technology sector earnings for signs of whether this correction represents a healthy consolidation or the beginning of a more prolonged downturn.