As a rough November moved into the home stretch, the mood brightened for stocks as a holiday-shortened but data-packed week kicked off on Monday following a quiet weekend on the newswires.

A sense that there may be some relative bargains to be found in certain names among the rubble of Tech/AI after the recent bloodletting and rapidly rising hopes of another Fed Funds Rate cut next month pushed the indexes higher at the open. They then kept chugging forward as the day went on with the tech-heavy NASDAQ leading the way, in particular on the back of an outstanding session for both Broadcom and Google, the latter now having added a trillion dollars to its value in less than a month.

There was a big pre-market data dump on Tuesday although a good deal of it was already out-of date due to the shutdown. Retail Sales for September disappointed and PPI picked up in September from its August level, reflecting higher energy and food costs. Consumer confidence in how the economy is doing continues to nosedive according to the latest survey. There were also a bunch of smaller, more B-list retailers who released their earnings which were mixed, but appeared to confirm the developing K-Shaped economy narrative.

The overall gut-check from all this data was that a Fed Funds Rate cut on December 10th was becoming more likely but the major indexes initially struggled to get off the ground since their largest component stock, Nvidia, got slammed as Google appears to be showing signs of success in eating its lunch.

According to reports on Tuesday, Kevin Hassett is emerging as the front runner to succeed Powell as Fed chairman next year. Hassett is a loyal Trump foot-soldier with zero Federal Reserve experience, who in 2018 said that “US tax law was written by someone on acid” and would obediently and vigorously advocate for rate cuts on the instruction of the president.

Stocks responded positively to close nicely in the green on typical holiday-week low volume and interest rates sank with the 10 year Treasury rate (which has the greatest impact on mortgage rates) briefly dipping below 4.00%.

The buy Google/sell Nvidia trade finally eased on November’s final full day of trading on Wednesday and the indexes continued their recovery in the low volume environment. The Durable Goods and Weekly Jobless Claims reports were not particularly dial-movers, but the market-driven odds of a December Fed Funds Rate cut soared to 86% by the close, up from a low of 35% just a week earlier (see INTEREST RATE EXPECTATIONS below).

Stock markets went into the Thanksgiving holiday riding their best four-day winning streak for months and the S&P 500 up over 16% for the year. But it’s really important to note that the index has its very own K-Shaped economy going on under the hood with more than a third of its component stocks down 20% or more from their 2025 highs with the ten largest names (2% of the stocks in the index representing 40%+ of the weighting) doing all the heavy lifting until recently in terms of the positive annual index performance.

Turkey-stuffed stock traders returned to their posts early for an abbreviated three-and-a-half hour session on Friday and were immediately confronted with a major CME futures exchange outage that was thankfully fixed by the cash market open. They carried stocks higher again on microscopic volume to complete their best Thanksgiving week performance since 2008.

Having been down 4.5% at one point just eight days earlier, the S&P 500 finished the month slightly in the green and new all time-record highs were back in view, heading into Santa Claus rally-time. Interestingly, there were no big tech sector names anywhere to be seen in November’s top ten performing stocks, bucking the trend of the year so far.

Financial markets will likely face the following questions in December:

* Is AI enthusiasm shifting to AI skepticism?

* Does the Fed either announce a pause in rate cuts in December or dampen hopes for continued cuts in early 2026?

* Will backlogged economic data indicate a weaker-than-expected economy?

* Will the Supreme Court’s tariff decision inject fresh uncertainty into the economy?

The answers to these questions will determine how things shake out in the remaining weeks of 2025.

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ARTICLE OF THE WEEK ..

“A home can be an important asset. But it can also be a bad financial investment, especially for the young.” Want to Buy a Home? It’s OK to Wait Till You’re 40 by Allison Schrager of Bloomberg.

.. AND I QUOTE ..

“Home buyers and sellers are living in different worlds now.”

Chen Zhao, head of economics research at Redfin

Home-sellers in the US are yanking listings off the market as the real estate sector stagnates. Nearly 85k sellers removed their properties in September alone.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Consumer Cyclical (two biggest holdings: Amazon, Tesla) ⬆︎ 4.9% for the week

Last week’s worst performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) ⬆︎ 1.2% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 3.7% last week, is up 16.6% so far this year and ended the week 0.9% below its all-time record closing high (10/29/2025).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 5.6% last week, is up 12.6% so far this year and ended the week 1.6% below its all-time record closing high (10/15/2025).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price rose 2.8% last week, is up 27.2% so far this year and ended the week 1.3% below its all-time record closing high (11/12/2025).

INTEREST RATES:

* FED FUNDS * ⬌ 3.875% (unchanged from a week ago)

* PRIME RATE ** ⬌ 7.00% (unchanged from a week ago)

* 3 MONTH TREASURY ⬇︎ 3.88% (3.90% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.47% (3.51% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.59% (3.62% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.02% (4.06% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.62% (4.67% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.67% (4.71% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday

* Decided upon by the Federal Reserve Open Market Committee at periodic meetings 8x a year. Used as a basis for overnight interbank loans and for determining high yield savings interest rates.

** Wall Street Journal Prime Rate as of Friday’s close. Used as a basis for determining many consumer loan interest rates such as credit cards, personal loans, home equity loans/lines of credit, securities-based lending and auto loans.

*** Used as a basis for determining mortgage interest rates and some business loans

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.23%

One week ago: 6.26%, one month ago: 6.18%, one year ago: 6.81%

Data courtesy of Freddie Mac Primary Mortgage Market Survey

INTEREST RATE EXPECTATIONS:

Where will the Fed Funds interest rate be after the final rate-setting meeting of the year on December 10th?

* Unchanged from now .. ⬇︎ 14% probability (31% a week ago)

* 0.25% lower than now .. ⬆︎ 86% probability (69% a week ago)

Data courtesy of CME FedWatch Tool

All data based on the Fed Funds interest rate (currently 3.875%). Calculated from Federal Funds futures prices as of the market close on Friday.

PERCENT OF S&P 500 STOCKS ABOVE THEIR OWN 200-DAY MOVING AVERAGE:

* ⬆︎ 60%

One week ago: 53%, one month ago: 60%, one year ago: 75%

Data courtesy of MacroMicro as of Friday’s market close

This widely-used technical measure of market breadth is considered to be a very robust indicator of the overall health of the S&P 500 index.

A high percentage (above 70%) generally suggests broad market strength and a bullish trend, while a low percentage (below 30%) may indicate market weakness and a bearish trend.

FEAR & GREED INDEX:

“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffet.

Data courtesy of CNN Business as of Friday’s market close

The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspects of stock market behavior. They are: market momentum, stock price strength, stock price breadth, put and call option ratio, junk bond demand, market volatility and safe haven demand.

Extreme Fear readings can lead to potential opportunities as investors may have driven prices “too low” from a possibly excessive risk-off negative sentiment.

Extreme Greed readings can be associated with possibly too-frothy prices and a sense of “FOMO” with investors chasing rallies in an excessively risk-on environment . This overcrowded positioning leaves the market potentially vulnerable to a sharp downward reversal at some point.

A “sweet spot” is considered to be in the lower-to-mid “Greed” zone.

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