Hot tech stocks are tumbling: Why Tesla, Palantir, Nvidia, and others are leading a market sell-off today
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News Summary
The U.S. stock market, which had minimally impacted by the longest government shutdown, tumbled on Thursday, November 13, 2025, amidst a tech stock sell-off driven by growing worries about overinflated valuations and dimming prospects for interest rate cuts. The S&P 500 shrank 1.66% to 6,739.49, and the Dow Jones Industrial Average fell 1.65% to 47,457.22, both hitting over one-month lows. This came just a day after the Dow surpassed 48,000 to reach a new record high. The Nasdaq composite also dropped 2.29% to its month low of 22,870.36. Shares of Tesla (TSLA) dropped 6.64% on Thursday, followed by another 4.78% in after-hours and premarket trading. Palantir Technologies (PLTR), often cited for its inflated valuation, saw its shares fall 6.53% Thursday and an additional 4.30% in after-hours and premarket trading, though it remained up 127.61% for 2025. Nvidia Corporation (NVDA), which just became the first company to hit a $5 trillion valuation in late October, also saw its shares fall 3.58%, with the drop continuing another 3.33% through after-hours and premarket trading. Nvidia's stock had already fallen earlier following news that Softbank sold its 32 million Nvidia shares, worth $5.8 billion, in October. These declines occurred alongside a decreasing likelihood that the Federal Reserve will cut interest rates at its December 9-10 meeting. According to CME FedWatch, the probability of a rate cut plummeted from over 98% a month ago to 62.9% on Wednesday and 50.1% on Thursday.
Background
This tech stock sell-off occurs at a pivotal market juncture. Just the day prior, the Dow Jones Industrial Average had hit a new record high, surpassing 48,000. Tech stocks, particularly leaders in AI and electric vehicles like Nvidia and Tesla, had shown robust performance throughout 2025, with Nvidia reaching a $5 trillion valuation in late October, underscoring high market optimism for their growth prospects. Nevertheless, concerns about valuation bubbles in these high-growth stocks have persisted. Concurrently, expectations for the Federal Reserve's monetary policy are undergoing a dramatic shift. A month ago, market consensus heavily favored rate cuts, but now the probability has significantly diminished. While President Donald J. Trump's administration, following his re-election in 2024, likely influences broader economic sentiment, this specific market adjustment appears more directly tied to the Federal Reserve's data-driven decision-making regarding inflation and economic strength.
In-Depth AI Insights
What are the deeper drivers behind the sudden reversal in Federal Reserve rate cut expectations? - Superficially, market reassessment of economic data and inflation trajectory is cited. However, considering potential fiscal expansion under the Trump administration in 2025 and ongoing global supply chain reconfigurations, inflationary pressures might be stickier than initially priced in. The Fed may be strategically deploying more hawkish communication to manage excessive market expectations for cuts, thus preempting potential inflationary resurgence. - This reversal could also signify increased Fed confidence in the U.S. economy's resilience, believing it can withstand a higher interest rate environment, potentially even reserving policy space for future overheating scenarios. Is the tech stock sell-off a healthy market correction or a signal of deeper underlying issues? - This could be a necessary 'shake-out,' cleansing the market of excessive speculative sentiment in high-growth tech stocks. Nvidia's $5 trillion valuation and Palantir's 127% year-to-date gain face significant scrutiny regarding their justification in a rising interest rate environment. - Softbank's sale of Nvidia shares is a noteworthy signal. Large institutional exits are often not driven by short-term volatility but by a re-evaluation of long-term valuation and risk-reward. This could portend challenges to the growth rate and profit margins even in hot sectors like AI chips. - If this sell-off persists, it could trigger broader concerns about the tech industry's overall profitability and future growth trajectory, especially amid global economic uncertainties and intensifying competition. What are the long-term implications of this market turbulence for investor asset allocation strategies? - Rising interest rate expectations and tech valuation corrections will likely drive capital reallocation from long-duration growth stocks towards value stocks or less interest-rate-sensitive sectors. Investors need to re-evaluate their exposure to highly valued tech and consider increasing allocations to companies with stable earnings and robust cash flows. - Given President Donald J. Trump's potential