November 2025 Market Insights Report
Capital markets in November 2025 were marked by strong equity gains, easing bond yields, and heightened volatility amid geopolitical and policy uncertainty. All eyes are on the Federal Reserve as investors evaluate the likelihood of a December rate cut. Our view is that the market has already priced in this cut, and if the Fed does not deliver a 25-basis-point reduction, we believe that could be very unsettling for equities.
Equity Market Performance
Stocks
S&P 500 closed at 6,849.09, up 0.54% for the month.
NASDAQ 100 rose to 25,434.89, gaining 0.78%.
Dow Jones Industrial Average ended at 47,716.42, rising 0.61%.
Russell 2000 (small caps) climbed to 2,500.43, up 0.58%.
Technology and growth stocks continued to dominate, with the “Magnificent 7” delivering outsized returns.
Volatility and the Bond Market
VIX (Volatility Index) spiked to 18.10, up 5.17%, reflecting investor caution.
10-Year Treasury Yield eased to 4.39%, signaling bond market strength and expectations of continued Fed easing.
Bond indices rallied, with the Bloomberg Aggregate Bond Index up 6.8% year-to-date.
Key Macro Trends
Developed market equities posted double-digit gains year-to-date, supported by resilient earnings and optimism around AI adoption.
Emerging markets outperformed in October, surging nearly 8%, though November saw profit-taking and weakness in risk assets.
In the U.S., SEC staff shifted shareholder proposal rules, requiring companies to notify rather than seek no-action relief under Rule 14a-8.
Year-End Themes to Watch
Historic recovery: The S&P 500’s 38% rally from April lows capped a remarkable turnaround.
Earnings strength: Over 85% of S&P 500 firms beat Q3 estimates, with ~12% earnings growth.
Consumer sentiment: Despite strong markets, confidence fell to 1980s lows due to government shutdowns and layoffs.
Valuations stretched: Cyclically adjusted P/E ratios exceeded 40, raising concerns of a correction.
November 2025 highlighted the tension between strong corporate fundamentals and fragile consumer confidence. Equities remained buoyant, bonds rallied, and volatility ticked higher. Global initiatives like Singapore’s dual-listing bridge underscored the push toward deeper capital market integration, while regulatory shifts in the U.S. signaled a more market-friendly landscape.
Consumer Spending & Employment Concerns
We have been writing throughout the year about our concerns regarding employment and consumer spending. Early indications from Black Friday are that consumers continue to spend in a very robust fashion. I am interested in seeing credit card balances in January because this could provide clues as to how consumers are positioned for spending in 2026. We continue to believe that a growing portion of the population is being squeezed by inflation and is increasingly concerned about job prospects, given the mass adoption of AI and recent job cuts.
Geopolitical Landscape
The geopolitical landscape remains challenged with Russia, China, and the Middle East all presenting ongoing challenges. Russia has taken the lead on drone strikes and continues to pound the area around Kyiv. The US is still trying to broker a peace deal; however, Russia wants to maintain not only Crimea, but some of the land that they have occupied since they invaded Ukraine. A major concern in ceding land to Putin is that this may appear to be simply rewarding illegal behavior.
China has been found to be conducting extensive surveillance on U.S. officials, and it continues to threaten Taiwan. More to come on both fronts, but each development further strains the already strained U.S.–China relationship. The battles in Gaza have quieted, but there is still no concrete plan in place to bring a peace agreement between Hamas, the Palestinians, and Israel.
Looking Ahead to December
As we look towards December and year-end, investors face a pivotal month shaped by the Fed’s final meeting, seasonal year-end flows, and mixed economic signals. Investors are looking for a traditional “Santa rally,” but risks from AI-driven valuations, consumer fatigue, and policy uncertainty loom large.
Within the stock market, December has historically delivered strong equity gains, but analysts warn that stretched valuations and rising volatility could temper the rally. This view is driven by high AI stock valuations and slowing growth, which could put the market at risk of a monthly loss despite seasonal optimism.
Given valuations, the tech sector remains vulnerable, while defensive sectors (utilities, healthcare) may attract flows if volatility persists. We continue to believe the bond markets are pricing in potential rate cuts, although officials remain cautious. On a positive note, the 10-year Treasury yield has fallen about 50 basis points year-over-year, creating a slightly improved lending environment. We think this is evident in the market, as loan originations rose 48% year-over-year through Q3 2025, signaling renewed confidence in credit markets.
Risks and Opportunities
As we look to December, strong third-quarter earnings and consumer spending support equity prices, but if consumer sentiment weakens, this is where we see risk for stocks over the short term. Globally, the EU has been able to declare success in achieving its desired inflation targets, which is reducing pressure on the ECB. If the dollar remains slightly weak, this will benefit emerging markets.
We think investors will be focusing on any conflicting signals between the bond markets and Fed officials, which could spark volatility. Another risk worth watching is the consumer. We also remain cautious about the consumer because while spending remains resilient, it is showing signs of slowing. The abundance of global tensions also has the ability to weigh on investor confidence at virtually any moment.
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