Last month appeared calm at first glance, but the underlying story proved more layered. U.S. markets hovered near record territory for much of November before losing steam as AI momentum met earnings results, Federal Reserve messaging reshaped expectations, and the government shutdown limited the flow of key economic data.
AI Leaders and Sector Rotation Shape Market Moves
Major U.S. stock indices reflected a mix of shifting rate-cut expectations and sharp rotations in AI and mega‑cap tech. While renewed hopes for easier Fed policy supported a late-month rebound, profit‑taking in stretched tech leaders ultimately capped performance. The S&P 500 edged up 0.13%, the Nasdaq 100 declined 1.64%, and the Dow Jones Industrial Average gained 0.32%.
Data Gaps and Fed Communications Drive Uncertainty
November’s macro backdrop centered on missing data, with the 43‑day federal shutdown eliminating the October CPI report and delaying the payrolls release to December. Fed officials filled the vacuum: Vice Chair Philip Jefferson noted that the October rate cut brought policy closer to neutral, while Governor Christopher Waller supported another quarter‑point cut in December. But FOMC minutes revealed a divided committee, with several policymakers preferring to hold rates steady unless growth weakens.
Inflation Signals Remain Mixed
With October’s household survey never collected, markets head into December without a clear unemployment reading. Meanwhile, Fed officials highlighted competing inflation forces. AI investment is improving productivity, yet shifting policies on tariffs and immigration could tighten labor and goods markets. Cleveland Fed President Loretta Mester emphasized that while GDP and unemployment remain near long‑run norms, inflation has edged higher again, and policy is now less restrictive than earlier this year.
Housing Trends Highlight Regional Divides
Existing‑home sales held at a 4.1 million annual pace in October, with prices rising modestly year‑over‑year. Inventory stayed tight at 4.4 months, and national home prices were up 2.2% year‑over‑year in Q3 before flattening in September. Regional trends varied widely, with gains in Connecticut and New Jersey offset by declines in Florida and D.C. Sellers reacted to shifting conditions with more delistings and record price cuts, and extended listings kept buyers firmly in control.
Looking Ahead to Year‑End
November’s crosscurrents offer a helpful frame for what comes next. The Fed is easing, though divided views and limited data make aggressive assumptions uncertain. AI and mega‑cap tech continue driving profits, yet recent volatility underscores the importance of selectivity. With more comprehensive economic data on the way and the Fed’s December 10th meeting approaching, these updates will serve as meaningful checkpoints for the broader economy.
As always, we encourage you to reach out to our financial team for personalized guidance and support as the year draws to a close.
