WEEKLY MARKET SUMMARY
Global Equities: The holiday-shortened week brought about a strong recovery for equity investors, with major indices rebounding sharply due to growing optimism for a December rate cut from the Fed. The S&P 500 gained nearly 3.7% during the week and the Dow Jones Industrial Average advanced 3.2%. The Nasdaq Composite was the strongest large cap performer, however, gaining 4.9% as technology stocks reasserted market leadership. Despite the strong week, the Nasdaq still registered its first losing month since March due to growing concerns over artificial intelligence valuations. US small cap stocks rallied in advance of the anticipated Fed interest rate cut, booking a 5.6% weekly gain. Developed international market stocks rose 2.7% during the week, while emerging markets were relative underperformers with a 2.3% gain.
Fixed Income: The 10-Year Treasury yield hovered slightly above 4% as rate cut odds surged to 85%, according to data from CME Group. Fed officials John Williams, Mary Daly, and Christopher Waller voiced concern over the weakening labor market and advocated for a rate cut, joining temporary Trump-appointee Stephen Miran, who has been vocally calling for aggressive cuts of over 1% to bring the Fed Funds rate to his personal target level of 2.5%.
Commodities: Oil prices saw a slight lift, with US West Texas Intermediate (WTI) prices firming up on expectations of strong winter demand, despite thin holiday trading volumes. WTI ended the week around $58.50/barrel. Gold and silver surged, hitting record highs, as softer yields and a weaker dollar increased demand for precious metals. Gold prices jumped 4.3% for the week to end around $4,239/oz, while silver surged 13% to a record $56.50. A December rate cut along with “One Big Beautiful Bill” tax cuts set to kick in are likely to accelerate inflation, which is already running hot at 3%, creating an increased demand for safe-haven assets.
WEEKLY ECONOMIC SUMMARY
Labor Market Worries: The common theme from Fed officials was growing concern over a weakening labor market, despite relatively good weekly jobless claims data. Seasonally adjusted initial claims decreased by 6,000 to a total of 216,000, the lowest level since April. This was below the 225,000 claims economists had forecast, while continuing claims increased slightly to 1.96 million for the week ending November 15. The Fed is in a tough spot after failing to bring down inflation at all this year and now risks throwing more fuel on the inflationary fire by cutting rates to bolster the jobs market.
Consumer Sentiment Dims: New data on consumer sentiment painted a bleak picture in advance of Black Friday kickoff to the holiday shopping season. The final University of Michigan Consumer Sentiment Index for November dropped to 51.0 from 53.6 in October, reaching its lowest level since June 2022. Consumers cited high prices and weak incomes as key concerns, with assessments of personal finances plummeting, especially among lower-income households. The Conference Board Consumer Confidence Index also fell for the fourth straight month to 88.7, indicating worsening consumer attitudes overall.
Fed Beige Book: The Federal Reserve’s November 2025 Beige Book indicated that overall economic activity was relatively unchanged since the prior report, but highlighted trends suggesting a softening economy and a “K-shaped” recovery where wealthier households fared better. Key insights included a slowing job market, weakening consumer spending particularly among lower-income households, lingering price pressures with businesses unable to pass on costs, and mixed, generally cautious business sentiment. The data, which is collected from each of the 12 regional Fed banks, supports other anecdotal evidence that lower and middle-income households are struggling with inflation while wealthier households continue to spend freely.
CHART OF THE WEEK
The Chart of the Week shows the Nasdaq Composite’s year-to-date performance plotted against the 50-day (blue line) and 200-day (red line) trendlines. Despite strong tech earnings this quarter, investors have begun to question the longevity of the artificial intelligence (AI) trade with growing concerns over the useful life assumption being applied to the sought-after GPUs powering AI. These worries caused the Nasdaq to slip below the 50-day trendline for the first time since the April tariff selloff. With growing confidence that the Fed will dump jet fuel on the markets with a rate cut, the tech trade has rallied back to retake the 50-day trendline, but will need to maintain that support level and put in a new high before investors can confidently call it a year-end Santa Rally.
