Weekly Market Reflection: November 16-22, 2025

Written By Connor

Interpreting Markets through a Behavioral Lens

Hello everyone, let’s take some time to digest and reflect on this past week in markets. This week was a good reminder of why I started this blog in the first place, not just to track what happened, but to slow down long enough to reflect on how we interpret what happened. From Washington to Wall Street to global policy and geopolitics, the headlines swung between anxiety and optimism. Underneath, the actual data and developments, I believe, told a more measured story.

In this post, I want to walk through the week’s key events, then step back and look at them through a behavioral-finance lens, what they were versus what they felt like, and close with some of my own reflections.

U.S. Financial & Economics Snapshot

  • After a record 43-day federal government shutdown, Washington is finally back to work. Lawmakers passed a stopgap funding bill that keeps the government open through January 30. The shutdown, however, came with a cost: gaps in critical economic data. The October jobs report was canceled, with its payroll figures folded into the November release, and there will be no standalone October unemployment rate. The October CPI report was also canceled because price data couldn’t be collected during the closure. Those missing inputs left investors operating with less visibility than usual on the state of the labor market and inflation.

  • We did, however, receive the delayed September employment report. It showed payrolls rising by 119,000, which was stronger than expected, while revisions revealed that employers had actually shed jobs in August. The unemployment rate ticked up to 4.4%, a four-year high, pointing to a somewhat looser labor market. In other words, hiring surprised to the upside even as joblessness inched higher. That mixed picture sparked debate about the Federal Reserve’s next move. Is this evidence enough that the economy needs rate cuts, or that it is still resilient enough to justify patience?

  • Fed officials added to the uncertainty. New York Fed President John Williams struck a dovish tone, describing policy as only “modestly restrictive” and suggesting there was room for a further adjustment to bring rates closer to neutral. Markets quickly interpreted that as a green light for a possible rate cut in December, and the implied probability of another cut moved higher. In contrast, Boston Fed President Susan Collins emphasized caution, saying she believes policy is “currently in the right place” and expressing hesitation about cutting again so soon, given still-elevated inflation and tariff-related price pressures. With the Fed funds rate already reduced in both September and October, investors are now trying to read a divided committee.

  • Bond markets reflected this tug-of-war. The 10-year Treasury yield drifted slightly lower as traders leaned toward the rate-cut narrative, but the move was modest, more reflective of recalibration than panic.

  • Equity markets, however, delivered more drama. Early in the week, Wall Street stumbled. The S&P 500 fell nearly 1% on Monday, breaking below its 50-day moving average after holding above it for 138 consecutive sessions. Large-cap tech led the decline as investors reassessed stretched valuations in the AI space. Nvidia, in particular, sold off sharply ahead of its earnings release, amid profit-taking and reports that a major early investor had exited its stake. Crypto markets weakened, and volatility indicators spiked, feeding the sense that risk appetite was suddenly evaporating.

  • By the end of the week, that mood had flipped. Nvidia’s Q3 results blew past expectations, easing talk of an imminent “AI bubble” collapse and helping power a rebound in tech. On Friday, roughly 90% of S&P 500 constituents finished higher, and the index gained about 1% on the day. The Dow and Nasdaq posted similarly strong daily returns. Even so, the major indices still finished slightly lower for the week, reminding us that the earlier drawdown was not fully recovered. The message here is that markets remain jittery and are quick to sell on any hint of bad news, and just as quick to rush back in when the narrative turns.

  • On the corporate side, one milestone stood out. Eli Lilly became the first pharmaceutical company ever to cross the $1 trillion market-cap threshold. The move crowns a year in which the stock has climbed roughly 35%, driven by intense demand for its weight-loss and diabetes drugs. The obesity treatment space has become a focal point for growth expectations, and Lilly’s ascent reflects investors’ conviction that this theme has a long runway. At the same time, reports of a cyber incident affecting major banks such as JPMorgan and Citigroup served as a reminder that operational and technological risks remain very real, even in an otherwise supportive macro environment.

Global Market & Policy Highlights

  • U.S. turbulence did not stay contained. Global equities felt the tremors from the early-week tech sell-off and from worrying signals in China. In Asia, Japan’s Nikkei fell around 2.4%, and South Korea’s KOSPI dropped roughly 2.6% following the Nasdaq’s mid-week weakness. European stocks opened weaker as well, with the STOXX 600 sliding close to 1% at one point.

  • A key catalyst was fresh Chinese economic data, which showed fixed-asset investment down 1.7% over the first ten months of 2025, a record decline. The numbers reinforced concerns about slowing Chinese growth, lingering property-sector stress, and deflationary pressure. For global investors, a cooling China raises questions about demand across commodities, manufacturing, and export-oriented economies.

  • In the UK, the FTSE 100 briefly approached the symbolic 10,000-point level before retreating as risk-off sentiment spread. The index ended the week modestly lower, with banks among the laggards. Policy developments added complexity: Chancellor Rachel Reeves abandoned a previously planned income-tax increase in her new budget, which initially lifted sentiment before broader selling took over. Across Europe more generally, defense stocks gave background as markets priced in a slightly higher probability of progress on the geopolitical front.

  • Geopolitics remained a central, if uneven, thread. Around the Russia-Ukraine conflict, diplomatic chatter pointed toward exploration of a new U.S.-backed peace proposal. Publicly, Western leaders characterized the plan as needing substantial work, but quiet talks among U.S., European, and Ukrainian officials in Geneva signaled that various off-ramps are at least being considered. Energy markets reacted: defense shares weakened, and oil prices drifted to one-month lows on the notion that any eventual ceasefire could reduce perceived supply risk. U.S. crude ended the week around $58 a barrel, down roughly 1.5% on Friday alone.

  • In the Middle East, the Israel-Hamas war remained a background source of tension. One notable development was the issuance of war-crimes warrants by the International Criminal Court for leaders on both sides, including Israel’s prime minister, an unprecedented step that is unlikely to change the near-term military or market dynamics, but underscores the severity of the conflict and its long-term implications.

  • Global central banks are also adjusting to softer conditions. Brazil’s central bank intervened in its currency markets to stabilize the real amid capital outflows, while Japanese officials escalated verbal warnings to counter yen weakness after multi-decade lows. More broadly, falling oil and commodity prices, combined with weaker Chinese demand, have many analysts expecting a more benign inflation outlook heading into 2026, even as policy uncertainty remains high.

Interpreting What’s Happening vs. What Actually Happened

In a week like this, behavioral finance is not an abstract concept; it is visible almost in real time.

Headline Anxiety vs. Actual Outcomes

Early in the week, the tone of commentary bordered on panic, with the talk of an AI crash, “shutdown paralysis,” and a Fed that might either be behind the curve or tightening us into recession. Volatility indexes jumped, and it would have been easy to internalize a story that everything was suddenly coming unglued.

If we take a step back, we can see that the picture looks different. The broader U.S. market finished only slightly down on the week and remains strongly positive year-to-date. The economy, while slowing, is still expanding. Inflation is gradually cooling. The labor market is loosening, not collapsing. What actually happened was a modest repricing of risk after an extended rally, not a structural break.

The discrepancy between “how it felt” and “what the data showed” is a classic case of availability bias and headline-driven perception. The more vivid the story, the more weight we give it.

Sentiment Swings and Investor Biases

The quick rotation from “risk-on” to “risk-off” and back again also showcased recency bias and confirmation bias. One down day in AI and high-growth stocks led some of us to conclude that the AI trade was over. A few days later, one set of strong Nvidia earnings led others to declare that everything was perfectly fine. I want to point out that neither extreme is accurate.

AI-linked equities have clearly been through a healthy valuation check, and there is real execution risk for companies priced for perfection. At the same time, the underlying demand for computational power and new AI applications remains significant. Beneath the surface, however, I think it is important to acknowledge the degree of circular financing present in this space. The capital that is raised by AI start-ups is often recycled into cloud credits and GPU spend with the same large platforms that are supplying them, venture funds markup these companies based on that “demand,” and public markets then validate the story with higher multiples. Revenue growth can look impressive, but part of it may be funded by investors themselves rather than by durable, end-user cash flows. When that loop is running, each leg of the chain feels like confirmation that the thesis is working, even if the underlying economics are more fragile than they appear.

Similarly, the macro data show both progress and challenge. Corporate earnings have been resilient, but consumers are feeling the strain of past inflation and higher rates; inventories are rising in some sectors even as others continue to grow. A reflective approach forces us to hold these tensions together rather than resolving them prematurely in whichever direction feels most comfortable, recognizing both the genuine innovation in AI and the possibility that part of the current revenue story is being pulled forward by subsidized, circular capital.

“What Is” vs. “What If”

Another useful frame this week is separating “what is” from “what if”. What “is” happening, the government has reopened; growth is slower but ongoing; inflation is easing; more than four out of five reporting S&P 500 companies have beaten earnings expectations; and central banks are at or near the end of their tightening cycles.

The “what ifs,” from my perspective, are the following: what if the Fed over-tightens? What if the Middle East war broadens? What if the AI trade really is a bubble? All of these are legitimate risks that deserve monitoring. But they did not crystallize into reality this week. Responding primarily to “what if” rather than “what is” often results in premature or poorly timed decisions.

My Thoughts – A Time to Reflect

Stepping back from the headlines, a few reflections stand out to me.

1. Don’t Chase the Noise

If someone had sold in fear during Monday’s sell-off, they likely would have regretted it by Friday’s rebound. Likewise, anyone buying indiscriminately into the late-week rally because they felt reassured by one earnings report may be setting themselves up for disappointment later.

I continue to believe that the most important signals are slower-moving, earnings trends, the health of the consumer, the direction of inflation, and the posture of central banks. On those fronts, the story remains cautiously constructive. But “cautiously” is a key word and needs to be taken with a grain of salt. There is no need to sprint when the environment rewards patience.

2. Reflection Over Reaction

One of the central themes of this blog is behavioral discipline. Before making any meaningful allocation changes, I try to create space for reflection: to ask what is driving my desire to act. Is it fear? FOMO? The pressure to “do something” because everyone else seems to be?

Take Eli Lilly’s $1 trillion milestone. It is an extraordinary achievement, and the underlying growth story is compelling. However, what have we learned from reflection? Ask yourself, has anything fundamentally changed about the company’s long-term outlook this week, or is this a moment where price has finally caught up with a widely understood narrative? Similarly, with recession fears, looking coldly at the data, we see moderation, not collapse. That nuance is easy to lose when social feeds are full of stark, absolutist takes.

For me, the discipline is to pause, process, and only then proceed.

3. The Outlook - Balanced and Vigilant

Looking ahead, my base case remains one of cautious optimism paired with respect for tail risks. The U.S. economy has proven more resilient than many expected. If inflation continues to trend lower and the Fed does move toward easing sometime in 2026, that could support risk assets.

At the same time, valuations in some segments, especially parts of tech and popular thematic trades, still leave little room for disappointment. Geopolitical risks are real, even if markets have largely learned to “look through” them until something acute happens. This argues for diversification, high-quality bonds, defensive equities, and select exposures to more cyclical or growth-oriented areas where the risk-adjusted reward remains reasonable.

Opportunities often emerge precisely when sentiment is most one-sided. Reflection helps us recognize those dislocations instead of being pulled along by the crowd.

Closing Reflection

This week underscored why taking time to reflect matters. If we only absorb the news at the speed it is delivered, we risk living in a constant state of emotional whiplash, fearful one day, euphoric the next. By slowing the pace, distinguishing the “what is” from the “what if,” and becoming more aware of our own biases, we give ourselves a better chance to make decisions rooted in clarity rather than impulse.

As always, none of this is about predicting the future with certainty. It is about cultivating a steadier mind in the face of uncertainty. The markets will continue to move. Policy will continue to evolve. Geopolitics will continue to surprise. What we can control is how thoughtfully we respond.

If you’ve read this far, I’m glad you’re here. I hope that this space continues to be a place where we can digest the busy world of finance with a bit more calm, context, and reflection. There is much more to explore.

Sources:

Connor
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