December 3, 2025
Bull Market Stumbles, but Quickly Regains Footing
The bull market saw a pullback in November, with the S&P 500 dropping 5.7% from its October high before recovering to finish the month up 0.1%. That marked the seventh straight monthly gain for the index. The Nasdaq snapped its streak with a -1.5% return.
After eleven months, the S&P 500 is up 16.5% and the Nasdaq is up 21.0%, building on the exceptional gains both indexes generated in 2023 and 2024.
November’s dip and rebound signaled healthier market participation. Leadership broadened into long-lagging areas like healthcare, energy, industrial commodities, transportation, homebuilding, and regional banking. This rotation is showing up in breadth, with the S&P 500 Equal Weight Index and the Russell 2000 both sitting just below new all-time highs.
The Fed cut rates again in November, but markets remain highly sensitive to every inflation and labor update. Each meeting has become a short burst of volatility as investors try to time future cuts, even though policy still points toward steady easing.
Corporate fundamentals remain a tailwind. Q3 earnings season came in far above expectations at 13.5% year-over-year growth, according to FactSet. While the exact timing of cuts is uncertain, markets continue to price in 75 bps of eventual easing, giving equities a constructive backdrop as long as earnings hold.
The US economy also remains resilient. The Atlanta Fed GDPNow model estimates Q3 growth to be 3.9%, supported by firm consumer spending and stable employment, which helps keep recession risk contained.
Gold and silver have surged 62% and 96% in 2025, respectively, their strongest year since 1979, according to Bloomberg.
Looking to early 2026, higher volatility is likely to become the norm. AI could enter a new phase where broad participation gives way to clearer winners and losers, making concentrated leadership and rich valuations more capable of driving sharp swings.
Fed meetings may also continue to spark volatility as investors handicap the path of cuts. The market expects a 25 bp cut next week, though Friday’s Core PCE reading could still shift expectations.
While valuations remain on the higher side, the combination of steady GDP growth, improving corporate earnings, and easing interest rates give us confidence for another good year ahead.
We wish you and your families a happy holiday season.
