Market Pullback Analysis: AI Stocks and Fed Uncertainty Drive November 2024 Volatility

This analysis is based on the Seeking Alpha report [1] published on November 15, 2025, which examined the market pullback during the week of November 11-14, 2025.

The market experienced significant volatility during the week of November 11-14, 2025, with major indices showing sharp declines followed by partial recoveries [0]. The S&P 500 dropped -1.3% on November 13 before rebounding +0.93% on November 14, while the NASDAQ fell -1.69% then recovered +1.58% [0]. The Russell 2000 was hit hardest with a -2.4% decline on November 13, though it recovered +1.23% the following day [0].

Sector performance data reveals a mixed picture on November 14, with Energy (+3.12%), Utilities (+2.16%), and Technology (+2.03%) leading gains, while Communication Services (-2.22%) and Basic Materials (-0.94%) underperformed [0].

While the Seeking Alpha article identifies AI-related stocks as bearing “much of the brunt” of the pullback [1], actual performance data shows significant resilience. Key AI stocks demonstrated strong recovery on November 14: NVIDIA (NVDA) gained +1.77% to $190.17, Super Micro Computer (SMCI) rose +3.79% to $36.42, and Palantir (PLTR) increased +1.09% to $174.01 [0]. The Technology sector overall posted a +2.03% gain [0], suggesting the AI sector’s weakness may have been overstated or short-lived.

The primary driver of market volatility appears to be Federal Reserve policy uncertainty. CME FedWatch data shows the probability of a December rate cut declining from 67% earlier in the week to 47-49% by November 13-14 [2][3]. This uncertainty is compounded by increasing FOMC committee divisions, with two dissenting votes at the October meeting [2][4]. Fed Chair Jerome Powell emphasized that a December rate cut is “not a forgone conclusion—far from it” [4].

A significant insight emerges from the contradiction between the article’s focus on AI stock weakness and the actual performance data. While AI stocks were mentioned as taking the brunt of the pullback [1], they showed strong recovery and outperformed many other sectors. This suggests either that the AI weakness was concentrated in smaller-cap stocks not captured in the major indices, or that the market’s assessment of AI fundamentals remains robust despite broader concerns.

The analysis reveals that Federal Reserve uncertainty, rather than AI sector fundamentals, appears to be the primary market driver. The declining probability of rate cuts and increasing FOMC divisions [2][4] create a challenging environment for growth stocks, particularly those with high valuations. However, the quick recovery in AI and technology stocks suggests that investors may be differentiating between short-term policy concerns and longer-term sector fundamentals.

Despite the dramatic price movements mentioned in the article [1], the pullback remained “well short of a bull market correction” and showed signs of resilience. The strong sector rotation into Energy and Utilities [0], combined with technology’s recovery, indicates that market participants are reallocating rather than exiting positions entirely.

The analysis reveals several risk factors that warrant attention:

1. Continued Fed Uncertainty
   : The declining probability of rate cuts could continue to pressure growth stocks, particularly those with high valuations [2][3].

2. FOMC Division
   : Increasing committee dissents may signal broader policy disagreements that could lead to more volatile market reactions [4].

3. Valuation Sensitivity
   : High-multiple tech and AI stocks remain vulnerable to rate-sensitive trading patterns, as demonstrated by the initial pullback [1][0].

• December FOMC Meeting
  (December 9-10): This meeting will be critical for determining market direction [4]
• Inflation Data
  : Any deviation from expected trends could significantly impact rate cut probabilities
• AI Earnings Season
  : Q4 earnings will test current valuations and sector fundamentals
• Market Breadth
  : Monitor whether the pullback spreads beyond growth sectors into broader market segments

The quick recovery in AI and technology stocks [0] suggests potential opportunities for investors who can differentiate between short-term policy-driven volatility and longer-term sector fundamentals. The strong performance of Energy and Utilities sectors [0] indicates defensive positioning opportunities during periods of Fed uncertainty.

The market pullback during November 11-14, 2025 was primarily driven by Federal Reserve policy uncertainty rather than fundamental weakness in AI stocks. While AI-related stocks were initially identified as bearing the brunt of the decline [1], major AI stocks showed strong recovery on November 14, with NVIDIA gaining +1.77%, Super Micro Computer rising +3.79%, and Palantir increasing +1.09% [0].

Federal Reserve rate cut probabilities declined significantly from 67% to 47-49% [2][3], with increasing FOMC committee divisions creating market volatility. Despite these concerns, the pullback remained short of a bull market correction [1] and showed signs of resilience, particularly in the Technology sector which gained +2.03% [0].

The analysis suggests that while Fed uncertainty may continue to create volatility, the underlying fundamentals of the AI sector appear stronger than initially indicated by the pullback narrative. Investors should monitor the December FOMC meeting and upcoming earnings season for clearer directional signals.