Another brutal day on Wall Street has called into question whether

U.S. stocks

can deliver during what is normally one of the strongest times of year.

The main problem is with the high-flying

technology stocks

that have powered a 34 per cent run in the S&P 500 since an April low. Their advance has stalled, leaving the market reliant on sectors more exposed to signs the economy is slowing and consumers are losing their mojo.

The S&P 500 slid 0.9 per cent Monday, pushing its drop in November to 2.5 per cent. The index has gone 14 trading days without a record — itself hardly a cause for worry, but still the longest stretch since the 88 sessions between February and June, according to data compiled by Bloomberg. The

Magnificent Seven tech stocks

are off nearly 5 per cent this month, with only

Alphabet Inc.

in the green. That group has accounted for virtually all of the market’s gain this year.

The

artificial intelligence trade

has started to wobble as investors worry the amount of borrowing needed to fund its buildout will become a burden. Just Monday, Amazon.com Inc. tapped the credit market for US$15 billion in a bond sale. The economy is showing signs of slowing, particularly in the labour market, and low-end consumers appear increasingly under pressure. With technical indicators also flashing warnings — both the S&P 500 and Nasdaq 100 closed below their average price for the past 50 days, for example — Wall Street strategists are questioning whether a year-end rally is in the cards.

“We’re running out of time,” said Adam Turnquist, chief technical strategist at LPL Financial, adding that year-end rallies typically start at the beginning of November, not after a drawdown halfway through the month. He sees “more pain ahead,” as key indexes slide below key chart levels.

The rest of the week is shaping up as critical for any run back toward all-time highs. Consumer giants like Walmart Inc., Home Depot Inc. and Target Corp. will deliver results and commentary on the looming holiday shopping period. Nvidia Corp. is the last of the big seven to give its business update. And government economic data, absent for the past seven weeks, will begin trickling out.

For some analysts, though, the S&P 500 might’ve already notched its last high for the year.

John Roque, head of technical analysis at 22V Research, said some “ugly” technical signals are cause for concern. Among them: The number of Nasdaq Composite components hitting 52-week lows outnumbers those hitting highs.

“There is no way a market can rally with new lows outnumbering new highs,” he said by phone.

Moreover, he sees Facebook-owner

Meta Platforms Inc.

as the “bellwether for this correction” because it started falling before its peers and may need to “make a low” before the current retreat in the market ends. The company’s spending plans for AI have alarmed investors worried any profits from the investments are in the distant future. Meta fell again on Monday, declining 1.2 per cent and is now down 24 per cent from its August peak.

Turnquist said he’s seen investor rotation not only out of large-cap tech names, but also unprofitable tech, Bitcoin, meme stocks and heavily shorted names as “we have this defensive tone that is developing in the market.”

The rotation from those risky pockets into more defensive corners of the market began last week. The top-performing sector in the S&P 500 was health care, which Turnquist said has been the biggest beneficiary of the trade out of high-momentum sectors.

“The U.S. momentum factor is sitting on multi-month support here and flirting with a breakdown,” said Emily Roland and Matt Miskin, co-chief investment strategists at Manulife John Hancock Investments. They warned that market action over the last week looked like “the ‘sell America’ trade was back from April.”

To be sure, 2025 can still go down as a banner year for stocks even without a normal rally through the holidays.

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The current rotation — which continued Monday with health care and utilities outperforming — “should unwind some of the frothiness built into the growth sectors,” said Sam Stovall, chief investment strategist at CFRA. The past two weeks have been turbulent as indexes have slumped, but right now, “hardly far enough to be labeled a pullback,” he said.

Similarly, Ned Davis Research described the recent selloff as “contained enough” to keep prospects of a rally alive, but warned that “the longer the consolidation goes without reestablishing the uptrend, however, the higher the risk it evolves into a topping process.”

— With assistance from Matt Turner.

Bloomberg.com