Reversal of Market Fortunes on Leveraged Buying Fears

Thursday, November 20, 2025

Well, that was quite a reversal. This morning, with the return of government economic data — and some better-than-expected labor market numbers — and basking in the glow of another brilliant NVIDIA NVDA earnings report Wednesday, market indexes were up between 1-2% as of the opening bell. We’re at the mirror opposite of that now — down -1-2%. 

So what happened? Consider it something of a second thought on these positive metrics we’d seen earlier. Yes, NVIDIA is still growing earnings and sales by more than +50% annually — but how long can that possibly last? Especially with the issue of leveraged financing going into the investment of things like AI infrastructure. Also — better jobs numbers? Well, doesn’t that mean we’re no longer going to get the 25 bps rate cut investors had priced into the market?

This is an oversimplification, but you get the idea. We’ve endured a rough November overall so far, but we’ve really started to slide off the table as of November 12th — the Dow is -2400 points from eight days ago, the S&P 500 is down -310, the Nasdaq -1325 and the small-cap Russell -145 points. Currently we’re trading back to the muddle-through weeks of late summer this year. Where do we go from here? Stay tuned…
 

Earnings Reports After the Close

The Gap GAP posted its seventh-straight quarter of revenue growth in its Q3 report out after the close today. Earnings of 62 cents per share beat the Zacks consensus by 4 cents, while revenues of $3.9 billion basically matched expectations. Comps were up +5%, even with Athleta’s weak -11% year over year growth. Shares are up +4% on the news, swinging to positive trading value year to date.

Ross Stores ROST had an even more impressive quarter on the numbers: earnings of $1.58 per share easily surpassed the consensus of $1.40. Revenues of $5.6 billion outperformed the $5.4 billion forecast. Next-quarter earnings guidance is up, as well, and we see the stock gaining nearly +3% in late trading, adding to its +6% gains from the start of the year.

Intuit INTU also made easy work of its estimates this afternoon in its fiscal Q1 report. The tax prep software firm posted earnings of $3.34 per share, above the $3.10 in the Zacks consensus, on revenues of $3.89 billion which bested the $3.76 billion expected. While next-quarter revenue guidance was raised, we do see it lowered on earnings in fiscal Q2. Shares are up nearly +3% nevertheless.

Questions or comments about this article and/or author? Click here>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research