Review & Preview: Risky Business

Nov 18, 2025 19:55:00 -0500 by Megan Leonhardt | #Markets #Review & Preview

Risk Off. The S&P 500 posted its fourth straight decline, as investors’ appetite for risk continues to fall.

The large-cap index ended the day down 0.8%. The Dow Jones Industrial Average fell 499 points, or 1.1%, while the Nasdaq Composite closed down 1.2%.

“Stocks are suffering losses for the fourth consecutive day as Wall Street adopts a risk-off posture, considering valuation worries, household spending anxiety, employment angst, and elevated inflation that is keeping the Fed at bay and increasingly preventing it from intervening,” writes José Torres, senior economist at Interactive Brokers.

Torres notes that investors spent the day bailing out of the market ahead of tomorrow’s earnings report from Nvidia, as the AI skepticism theme gains traction. Semiconductor stocks got beat up Tuesday, as did other companies tied to the AI trade. Nvidia’s results due Wednesday afternoon could send an all-clear message or justify the growing skepticism around AI.

This morning’s earnings miss from Home Depot added fuel to the related fire growing around the consumer and the stalled housing market, driving some of today’s market malaise. The retailer’s CEO Ted Decker blamed the weaker-than-expected quarter on a lack of storms, even as the company raised its sales outlook slightly.

Both Home Depot and rival Lowe’s have forecast a rebound in the home-improvement sector that hasn’t yet materialized. Blame a stagnant housing market.

Company

Last

Chg

Chg%

Dow Jones Industrial Average

46,091.74

-498.50

-1.07%

S&P 500 Index

6,617.32

-55.09

-0.83%

NASDAQ Composite Index

22,432.85

-275.23

-1.21%

Market Data as of

The Hot Stock: Medtronic +4.7%
The Biggest Loser: Home Depot -6.0%

Best Sector: Energy +0.8%
Worst Sector: Consumer Discretionary -1.9%

Created with Highcharts 9.0.1Tuesday, Nov. 18Index performanceSource: FactSetAs of Nov. 20, 3:50 p.m. ET

Created with Highcharts 9.0.1Nov. 20-3-2-10123%Dow industrialsS&P 500Nasdaq Composite

Where Labor Stands

On the surface, the labor market data out today looked pretty grim, causing at least a few traders to rethink the odds of a December rate cut. I feel like a bit of a broken record, but I’m still saying it’s not time to panic … yet.

ADP’s new weekly labor pulse indicator revealed that private employment was down 2,500, on average, for the four weeks ending Nov. 1. Moreover, thanks to a technical glitch, the Labor Department inadvertently posted data that showed initial jobless claims rose to 232,000 during the week of Oct. 18. That’s a significant step up from the 219,000 claims filed during the week of Sept. 20, the last complete release on file.

On top of all that, the Cleveland Fed estimated that 39,006 workers were given advanced termination notices under the Worker Adjustment and Retraining Notification (WARN) Act in October.

This all makes it tempting to think the labor market might be at risk of collapse, which could prompt the Federal Reserve to cut interest rates at its meeting from Dec. 9 to Dec. 10.

But it’s worth looking at all of these indicators in context. First, ADP: It looks bad, until you realize that the latest payroll decline was a lot less than the four-week moving average decline of 11,250 for the week of Oct. 25.

The low point for private employment in ADP’s pulse data set actually came the week of Aug. 30, when private payrolls shed a four-week moving average of 17,750 jobs. Yet the full month measure showed that private employment declined by just 3,000 in August. And the Bureau of Labor Statistics’ initial estimate showed a gain of 22,000 jobs in public and private payrolls for August. Economists are expecting September’s delayed employment data to show employers added 50,000 jobs that month. The delayed jobs report is due out Thursday at 8:30 a.m. ET.

Initial jobless claims, a volatile weekly data set, have also edged lower in the weeks since mid-October. So, in essence, today’s claims data are old. Citi economists, who correctly estimated that claims hit 232,0000 for the week of Oct. 18, calculate that the number of workers filing for initial unemployment benefits dipped to 228,000 during the week of Nov. 8—down from 229,000 the week prior.

“The level of initial claims is still within the range of the last year, and outside of the shutdown, initial claims generally do not point to any meaningful pick up in layoffs in the private sector,” writes Citi’s Gisela Young.

The full delayed jobless claims data will be available by close of business on Nov. 20, a Department of Labor spokesperson told me this afternoon.

Meanwhile, the latest WARN notice estimate doesn’t really push the narrative further on layoffs. We know that October was a high-volume month for termination notices, thanks to data from MacroEdge and Challenger, Gray & Christmas. But looking at Revelio data, layoff announcements haven’t yet translated to spikes in actual terminations.

Bottom line, the labor data are going to be at best, noisy—and, at worst, a complete mess until we get December readings. The shutdown not only delayed official government statistics, but it also played havoc with unemployment and payroll data for federal workers, along with anyone who relies on the federal government for revenue—including contractors, restaurants, and greater Washington, D.C.-based businesses.

That means it’s hard to pinpoint seasonal trends versus shutdown fallout versus an actual downswing. I put a decent amount of faith in the Chicago Fed’s unemployment estimate that blends together labor inputs from ADP, Indeed, and Lightcast, along with BLS data (when available). It shows unemployment remained fairly consistent in September and October, moving from 4.35% to 4.36% last month.

The advance estimate for November unemployment will be available on Monday. For now, the data on hand show not great, but relatively steady, conditions.

The Calendar

Lowe’s, Nvidia, Palo Alto Networks, Target, TJX Cos., Viking Holdings, and Williams-Sonoma report quarterly results tomorrow.

The Federal Open Market Committee releases the minutes from its October monetary-policy meeting. At that time, the FOMC cut the federal-funds rate by a quarter of a percentage point, to 3.75%—4%. There were two dissenting votes in either direction, with Fed governor Stephen Miran voting for a half-point cut, and Kansas City Federal Reserve Bank President Jeff Schmid voting for no cut at all.

What We’re Reading Today

What’s Ahead for Markets in 2026? Join Barron’s virtual roundtable on Dec. 11.

From “Liberation Day” tariffs to torrid rallies in AI stocks and gold, this year has been full of surprises. Join us for discussions with investment strategists and money managers about the outlook for the economy and markets in 2026—and how to position your portfolio for success.