Weekly Market Analysis: Tech Tumbles as Factor Rotation Accelerates
A detailed breakdown of the data driving strategy performance for the week ended November 7, 2025
Key Takeaways for Backtesters
- Factor Stress Test: A violent rotation from Growth-Momentum into Value provided a perfect stress test for factor-based strategies.
- Rotation, Not Collapse: Headline indices looked weak, but underlying breadth was better, with Small/Mid-caps holding firm.
- Dollar Dominance: A strengthening DXY was a key driver, creating headwinds for global equities (EEM) and commodities.
The Story: A Sharp Rotation, Not a Rout
The market’s three-week rally hit a wall, as a sharp pullback in technology and growth-related stocks snapped the winning streak. The major takeaway was a sharp risk-off rotation. Investors took profits from high-flying growth and tech names and moved into more defensive, value-oriented areas.
For strategy builders, this was a classic test: did your strategies get caught in the growth downdraft, or were they diversified to capture the relative strength in value?
Economic Pulse
The ongoing government shutdown remained the biggest story, delaying the official October jobs report. The private data we did get painted a weak picture, and this uncertainty crushed consumer sentiment. The University of Michigan’s preliminary survey for November fell to 60.5, its lowest level since 2022.
Strategy Implication: For strategy builders, this is a key data point. While the current conditions look bleak, historically low sentiment is often a powerful contrarian indicator. Such extreme pessimism can signal that the worst news is already priced in. This weak data also solidified market expectations for Fed easing, with futures now pricing in a 70% chance of a 25-basis-point cut in December.
Global & Fixed Income
Global Markets
The risk-off tone was global. Developed markets (EAFE) fell 1.9%, tracking the U.S. sell-off. Emerging markets (EEM) were hit harder, falling 2.8%, as the flight from growth was compounded by a stronger U.S. Dollar. Frontier markets (FM), the highest-risk category, saw significant outflows and fell 3.4%.
Bonds & Interest Rates
The bond market was relatively calm. The 10-year Treasury yield ticked up slightly to 4.11%, while the 2-year yield held steady, resulting in a slight steepening of the 2s/10s curve. Corporate and High-Yield credit spreads widened only slightly, suggesting that while equity investors were rotating, there was no widespread panic in the credit markets.
Commodities & Digital Assets
The U.S. Dollar Index (DXY) firmed to 106.5 as investors sought safety, creating a headwind for most commodities. Gold, however, shined as a primary safe-haven, rising to ~$4,020/oz. It rallied *despite* the stronger dollar, signaling strong underlying demand.
Reflecting growth fears, WTI Crude Oil was flat at $59.80, while Copper (a key growth proxy) fell 2.2%. In digital assets, Bitcoin saw a sharp correction to ~$103,500, while Ethereum fell in sympathy to ~$8,200.
Weeks like this are a perfect reminder: markets rotate fast. Test your strategies accordingly.