November 20 U.S. Stock Market Plunge — Three Shocks That Shook the Market and the Outlook Ahead
On Thursday, November 20, the U.S. stock market surged in the morning on broad optimism, with the Dow Jones, Nasdaq, and S&P 500 all rebounding 1–2%. Risk-on sentiment seemed to return. However, the entire market reversed sharply in the afternoon, freezing investor sentiment in an instant. The Nasdaq, which had been up more than 2% earlier, plunged 4.56% from its intraday high and closed down 2.20%, triggering extreme fear among traders. This wasn’t a simple decline — it was a macro-risk-driven sell-off triggered by volatility spikes, deteriorating sentiment, and worsening macro conditions.
The volatility index (VIX) also fell below 20 earlier in the session but later spiked to 28, reflecting heightened sensitivity to interest rates, tech earnings, and the sharp drop in cryptocurrencies.
1. Three Major Factors Behind the Market Crash
① Greater uncertainty over Fed rate cuts
The first driver was the sharp rise in uncertainty over potential Fed rate cuts. In the morning, Trump’s comment about “delaying semiconductor tariffs” and Nvidia’s strong earnings fueled optimism. But the September Nonfarm Payrolls (NFP) number came in far above expectations, flipping sentiment instantly. A hotter labor market signaled that a rate cut might not come as easily as hoped.
Despite Verizon announcing significant layoffs, Fed officials reiterated that “inflation hasn’t fully returned to the 3% range,” suppressing hopes for a quick rate cut. This messaging rapidly cooled investor sentiment.
② Mixed market reaction to Nvidia’s earnings
The second factor was the mixed reaction to Nvidia’s earnings. Nvidia beat expectations across revenue, profit, and guidance, confirming strong AI infrastructure demand. However, the Wall Street Journal pointed to renewed concerns of an “AI investment bubble,” and some analysts highlighted the rising share of accounts receivable.
This suggests revenue may be increasingly booked but not yet collected in cash — leading some to argue that parts of the AI boom may be overstated. Consequently, tech stocks surrendered all morning gains and turned sharply lower.
③ Cryptocurrency crash centered on Bitcoin
The third major factor was the collapse in the crypto market. Bitcoin failed to hold above $93,000, broke below $90,000, and plunged to the $86,000 range. The sell-off triggered widespread liquidations across the crypto market, intensifying risk-off sentiment in equities as well.
2. Key Stocks and Sector Movements
Mega-cap tech stocks such as Nvidia, Microsoft, Apple, Google, Meta, and Amazon all erased their morning gains and finished lower. Google briefly surpassed $300 before pulling back; Meta and Tesla also plunged after breaking above $600 and $420, respectively.
Tesla fell toward the 100-day moving average near $393, despite strong signals including robust Model Y China sales, autonomous taxi approval, Supercharger expansion, and top European safety ratings.
Semiconductors — Nvidia earnings couldn’t stop the decline
Despite Nvidia’s strong results, the Philadelphia Semiconductor Index (SOX) plunged 4.8%. SOXL fell 14% into the low 30% range, reflecting both rate-cut uncertainty and doubts over AI earnings sustainability.
Defensive and consumer staples — relative strength
Walmart posted better-than-expected results and gained, highlighting how essentials tend to hold or grow revenue during slowdowns. Defensive names like Visa, Mastercard, Johnson & Johnson, Merck, and Eli Lilly remained relatively resilient.
3. Why were quantum-computing-related stocks weak?
IBM’s announcement of expanding its quantum computing ecosystem with Cisco seemed like positive news. However, other related names — including Palantir, SMCI, and Rigetti — fell as market attention concentrated on IBM. This is a typical “theme crowding” effect where the leader absorbs all the positive sentiment, hurting peers.
4. Market Outlook — Is a deeper correction coming?
Many analysts warn that “this correction may deepen”. Despite rising unemployment, the chance of a December rate cut remains below 50%, meaning the market’s direction is still unclear.
Tomorrow brings options expiration (heightened volatility), Michigan consumer sentiment, inflation expectations, and S&P PMI — which could trigger even more volatility than today.
Investors should avoid panicking, observe the market carefully, and stick to fundamentals such as diversification and proper cash allocation.
