Market Pulse: Wednesday, December 17, 2025

A brutal day for tech as the Nasdaq tumbled 1.8%, led by sharp declines in AI chipmakers. Nvidia fell 3.8%, Broadcom dropped 4.5%, and AMD slid 5.3%. But here’s what’s fascinating: the advance-decline ratio held at 1.05—essentially flat—with 257 stocks advancing versus 244 declining. This divergence between mega-cap tech carnage and balanced breadth tells us this is concentrated selling in the AI trade, not a broad market retreat. All eyes now turn to tomorrow’s CPI report.

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Market Breadth: Balanced Despite Tech Bloodbath

Metric	Today (Dec 17)	Tuesday (Dec 16)	Monday (Dec 15)
Advance/Decline Ratio	1.05	0.36	1.48
Advances	257	133	174
Declines	244	368	118
Advancing Volume	39.4%	43.3%	35.1%
Stocks Near 52-Week Highs	8	6	22
Stocks Near 52-Week Lows	0	0	1

What the Numbers Say

The A/D ratio rebounded sharply from yesterday’s dismal 0.36 to a balanced 1.05. With 257 advancers versus 244 decliners, the median stock actually held up while mega-cap tech was getting crushed. This is classic sector rotation, not systemic selling.

However, the volume story is different. Advancing volume fell to just 39.4%, meaning declining stocks attracted more capital despite the balanced headcount. When you see narrow breadth losses but heavy volume concentration in decliners, it signals the big money is actively exiting specific positions—in this case, the AI complex.

Stocks near 52-week highs ticked up slightly from 6 to 8, and importantly, stocks near 52-week lows remained at zero for the third consecutive day. Even during tech’s worst day in weeks, no stocks are breaking down to distress levels.

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Market Performance: Tech Takes the Hit

Index	Close	Change	% Change
S&P 500	5,872.16	-68.67	-1.16%
Dow Jones	43,449.90	-203.34	-0.47%
Nasdaq	19,392.69	-357.86	-1.81%
Russell 2000	2,231.45	-25.12	-1.11%

The Nasdaq’s 1.81% decline was the standout, its worst performance since early November. The S&P 500 fell 1.16%, weighed down by its heavy tech weighting. The Dow held up relatively better at -0.47%, benefiting from its old-economy tilt.

Small caps (Russell 2000 -1.11%) actually outperformed the Nasdaq, which is notable. During genuine risk-off episodes, small caps typically lead lower. Today’s relative strength in small caps reinforces the view that this is a targeted unwind of the AI trade rather than broad de-risking.

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VIX and Volatility: Fear Gauge Jumps

Metric	Today (Dec 17)	Tuesday (Dec 16)	Monday (Dec 15)
VIX Level	17.62	16.51	16.50

The VIX spiked nearly 7% to 17.62, its sharpest one-day jump since mid-November. While still below 20, the move signals traders are buying protection ahead of tomorrow’s CPI release.

Options markets are showing divergent signals across sectors:

• SPY IV: 13.96% (low, -18% vs historical avg)
• QQQ IV: 19.88% (normal, -10% vs avg)
• XLK IV: 30.95% (elevated, +35% vs avg)
• XLY IV: 64.20% (extreme, +221% vs avg)

The elevated IV in Tech (XLK) and Consumer Discretionary (XLY) reflects concentrated uncertainty in growth-sensitive sectors. SPY and QQQ implied volatility remains relatively contained, suggesting this isn’t systemic fear but sector-specific hedging.

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Headlines Moving Markets

Several catalysts drove Wednesday’s sharp tech rotation:

AI Trade Unwinds: Nvidia (-3.8%), Broadcom (-4.5%), and AMD (-5.3%) all suffered significant losses. The selloff appears driven by profit-taking after the massive AI rally and concerns about near-term demand visibility. With valuations stretched after a historic 2025 run, any uncertainty triggers sharp moves.

Micron Beats But Falls: Micron (MU -3.0%) reported better-than-expected earnings, highlighting strong memory demand driven by AI workloads. But the stock fell as investors questioned whether the good news was already priced in—a classic “sell the news” reaction.

Oracle Slides on Cloud Concerns: Oracle (ORCL -5.4%) dropped after analysts raised questions about cloud growth sustainability. One analyst called the concerns “almost irrelevant” to the long-term thesis, but near-term traders weren’t convinced.

Tesla EV Woes: Tesla (TSLA -4.6%) declined on a report highlighting its EV market share erosion, with analysts warning “things are about to get worse” as competition intensifies in 2026.

Medline IPO Soars: In a bright spot, healthcare distributor Medline (MDLN +41%) surged in its market debut, underscoring continued IPO demand in defensive sectors.

Post-Fed Positioning: Markets continue adjusting after last week’s Fed rate cut. The “economic jitters” narrative persists as investors weigh rate relief against stubborn inflation concerns heading into tomorrow’s CPI.

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Technical Snapshot

The S&P 500 is testing support after today’s 1.16% decline. Key levels to watch:

• Resistance: 5,950 (recent highs)
• Support: 5,850 (20-day moving average)
• Critical Support: 5,750 (50-day moving average)

The Nasdaq’s sharp selloff puts it closer to its 50-day moving average, which has served as support throughout 2025’s rally. A bounce from current levels would be constructive; a breach would signal more meaningful distribution.

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Looking Ahead: CPI Tomorrow

Thursday’s November CPI release is the week’s most important data point. Expectations:

• Headline CPI: 3.1% year-over-year
• Core CPI: 3.0% year-over-year

A hotter-than-expected reading could reignite inflation fears and call into question the Fed’s recent rate cut decision. A cooler reading would validate the Fed’s move and likely spark a relief rally, particularly in beaten-down tech names.

The setup is interesting: breadth is balanced, VIX is elevated but not panicking, and the selloff is concentrated in the highest-flying names. This looks like pre-CPI positioning and AI profit-taking rather than the start of a broader correction.

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Bottom Line

Today’s tech-led selloff looks painful but is actually quite orderly when you examine the internals. The A/D ratio at 1.05 means the average stock held steady while mega-cap tech absorbed the selling. Zero stocks at 52-week lows. VIX up but still sub-18.

The message: this is sector rotation and CPI positioning, not the start of something worse. Tomorrow’s inflation data will likely determine whether tech’s decline becomes a buying opportunity or extends further. Stay focused on breadth—if it deteriorates alongside index losses, that would be a different story.

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Market Pulse provides daily analysis of S&P 500 market breadth, sector rotation, and volatility signals to help investors understand what’s happening beneath the surface. Data sourced from our real-time market breadth collectors.