S&P 500 Volatility and Sector Rotation Amid December Fed Rate Cut Uncertainty (November 2025)

The S&P500 faced heightened volatility last week amid uncertainty over December Federal Reserve rate cuts [7]. The index recorded a sharp drop of -2.96% on November 20 [0], followed by a partial recovery, resulting in a weekly change of approximately -1.04% from Nov17 to Nov21 [0]. This volatility triggered significant sector rotation: investors sold riskier tech stocks (MSFT: -2.9% on Nov20 [3], AAPL: -1.69% on Nov20 [2]) and blockchain stocks (MARA: -10.8% on Nov20 [4]) while shifting to defensive assets like healthcare (JNJ: +0.53% on Nov20 [5]) [1]. Fed policy uncertainty, driven by divided member comments and mixed economic data, is the primary catalyst [6].

1. Fed Policy Divide Impacts Sector Rotation
   : December rate cut uncertainty (CME FedWatch ~85% probability [6]) amplified risk asset sensitivity, with blockchain stocks more vulnerable than general tech.
2. Defensive Hedges
   : Healthcare and defensive sectors emerged as effective volatility hedges, outperforming tech/growth stocks [1].
3. Short-Term Trend
   : Current rotation is tied to immediate Fed expectations rather than structural shifts [6].

• Volatility Risk
  : Tech/blockchain stocks may face continued volatility if rate cuts are delayed [6].
• Policy Surprise Risk
  : A no-rate-cut decision in December could trigger further declines in riskier assets [6].

• Defensive Sector Outperformance
  : Healthcare and defensive sectors may continue to generate positive returns amid uncertainty [1].
• Tech Recovery Potential
  : Tech stocks could rebound if the Fed confirms December rate cuts [6].

• S&P500 Weekly Change
  : ~-1.04% (Nov17-21 [0])
• Notable Stock Movements
  : MARA (-10.8% on Nov20 [4]), MSFT (-2.9% on Nov20 [3]), JNJ (+0.53% on Nov20 [5])
• Fed Rate Cut Probability
  : ~85% for December (CME FedWatch [6])
• Sector Trends
  : Risk-off sentiment favors defensive sectors over tech/blockchain [1,7]