The S&P 500 experienced a significant rotation away from artificial intelligence stocks in December 2025, shifting investor capital toward value and defensive sectors amid concerns over AI valuation sustainability and macroeconomic headwinds.

Healthcare stocks rallied 9.3% amid a sector rotation out of technology, which declined 4.8%, reflecting investor reassessment of valuations, interest rates, and defensive positioning in a shifting economic environment.

Electricity inflation is accelerating as artificial intelligence data centers demand record amounts of power, pushing grid strain and household energy bills higher. Industry analysts project energy-intensive AI workloads could increase U.S. electricity consumption by 10-15% within five years, creating significant cost pressures for both consumers and utilities.

Healthcare equities delivered a 9.29% gain in November as investors rotated into defensive sectors, while technology stocks retreated 4.81%, signaling a significant shift in market leadership and investor risk appetite.

The technology sector's significant outperformance against communications stocks in 2025 reflects structural shifts in AI adoption, valuation dynamics, and interest rate sensitivity rather than temporary market noise.

This week's unexpectedly strong employment report showed 312,000 new jobs versus 180,000 forecast, triggering Treasury yield spikes and equity sell-offs. We analyze the data sources, sector anomalies, and revised Fed rate expectations driving market turbulence.

July 2025's Treasury auctions delivered shocking results with record-low indirect bidder participation at just 59.3% and a tail of 4.2 basis points for 10-year notes. These outcomes triggered the steepest 2s10s yield curve inversion since 2022 at -65bps, forcing market repricing of Fed policy expectations. Primary dealers absorbed $42B in unsubscribed debt, signaling structural demand shifts that may reshape fixed-income strategies.

The S&P 500 surged towards all-time highs driven primarily by the Federal Reserve's pivot towards potential interest rate cuts in 2025, significantly boosting equity valuations and investor sentiment during the December rally.

As the accelerated growth rates in key AI-driven technology stocks begin to moderate, institutional investors are strategically assessing a sector rotation, shifting capital from expensive tech valuations toward the defensive and historically stable **tech healthcare rotation** sector, particularly during periods of elevated interest rates and economic uncertainty.

Five Below's recent earnings success, driven by strong traffic and value-seeking behavior, confirms a widespread consumer shift to discounts, which is reshaping retail strategies and providing critical foresight into Q4 holiday spending patterns.