What Changed?
The market finally saw what happens when technology — now priced at a premium — takes a breather. In early December, the S&P 500 notched a fresh record high even as its technology sector fell on the day. Materials gained about 2% and financials rose 1.8%, showing that the index can advance even when its largest sector steps back.¹
A similar pattern appeared in November. Through November 21, the S&P 500 was down 3.5% for the month, and the Nasdaq was off 6.1%. Technology dropped 8.3%, while health care rose 7.1%. Staples, energy, materials, communication services, and real estate also posted gains over the period.² What looked like a tech stumble was really a rotation hiding in plain sight.
The shift is getting attention at the strategist level. After 15 years of preferring tech and communication services, Ed Yardeni recently moved both to market weight and emphasized financials, industrials, and health care — sectors he argues could lead more of the “Impressive 493” that sit outside the most hyped names.³
Eric Fry is breaking ranks with Wall Street by saying "Sell Nvidia." Because history, he says, is repeating itself. In 2000, Eric Fry told Barron's that folks should sell one of the dot-com boom's most beloved stocks right before it fell more than 90%. Now, he says investors need to replace Nvidia stock with a much better alternative – before their money is wiped out.
The Numbers
S&P 500 forward P/E: 22.4x, above the 5-year average (20.0x) and 10-year average (18.7x).
Expected Q4 2025 earnings growth: +7.7%, with 9 of 11 sectors set to grow earnings.⁴
Expected Q4 revenue growth: +7.5%.⁴
November rotation: Tech –8.3%, Health care +7.1%, with multiple defensive and cyclical sectors rising even as the index fell.²
Market concentration: Tech + communication services represent 45.2% of market cap and 38.6% of forward earnings.³
Why It Matters
The next phase of leadership may not rely on richer valuations for mega-cap tech, but on consistent earnings delivery elsewhere. Industrials stand to benefit from resilient nominal spending, infrastructure outlays, and supply-chain investment — themes less sensitive to incremental rate cuts than to economic momentum itself. Health care’s November strength reflects its dual role: defensive in slowdowns, yet capable of producing steady revenue expansion.
Real estate’s participation in the November rebound signals that rate relief — or even just rate stability — changes the sector’s narrative. Instead of trading solely as a bond proxy, REITs can begin reflecting fundamentals like occupancy, rent growth, and specialized niches such as data centers.
Utilities remain more nuanced. FactSet data shows they’ve absorbed some of the largest downward revisions to Q4 earnings estimates.⁴ Lower yields help, but earnings pressure argues for selectivity over broad allocation.
The broader signal is clear: when a sector that dominates nearly half of index earnings pauses, leadership naturally widens. Investors are no longer asking whether tech slows; they’re asking which sectors step in when it does — and the past several months offer early candidates.
Takeaway
The story is not about abandoning tech. It’s about recognizing that market strength becomes more durable when gains come from multiple engines. Industrials, health care, real estate, and even parts of utilities are reentering the conversation — not to replace tech, but to share the load more evenly.
— Lauren Brown
Editor, American Ledger
Sources
Reuters, December 2025 https://www.reuters.com/business/sp-500-notches-first-record-high-close-since-october-2025-12-11/
D.A. Davidson, “The Week Ahead,” November 2025 https://www.dadavidson.com/Portals/0/Wealth_Management/Research/2025/Weekly_Market_Update_112425.pdf
MarketWatch, December 2025 https://www.marketwatch.com/story/why-this-veteran-strategist-is-dropping-his-preference-for-tech-stocks-after-15-years-e186d1a5
FactSet Earnings Insight, December 2025 https://www.factset.com/earningsinsight