During November, financial markets went through a short period of ups and downs that touched many different types of investments. Even though major market indexes have shown strong gains this year in stocks, bonds, and international investments, people who invest are still concerned about two main things: stocks related to artificial intelligence (AI) technology and what the Federal Reserve (the Fed, which is America’s central bank) will do with interest rates. On top of this, a government shutdown meant that important economic reports came out late, making it harder to understand how the economy is performing.
Even with these market swings, many types of investments steadied and recovered by month’s end. For people investing for the long term, this shows why it’s important to have a properly balanced mix of investments that can handle market ups and downs. Good investing means keeping your eye on long-term goals instead of chasing quick gains or reacting to news stories.
What caused November’s market movements and how can people who invest keep things in perspective as the year comes to a close?
Important Market and Economic Events in November
- The S&P 500 (a measure of 500 large U.S. companies) went up slightly by 0.1% in November, the Dow Jones Industrial Average (another market measure) gained 0.3%, and the Nasdaq (which tracks technology-heavy stocks) fell 1.5%. For the full year so far, the S&P 500 is up 16.4%, the Dow is up 12.2%, and the Nasdaq is up 21.0%.
- The VIX (a measure that shows how much the stock market is expected to swing) finished lower at 16.35 after climbing as high as 26.42 during the middle of the month.
- The Bloomberg U.S. Aggregate Bond Index (a measure of the bond market) rose 0.6% in November and is up 7.5% for the year. The 10-year Treasury yield (the interest rate on a government bond) ended the month lower at 4.02%, after briefly dropping below 4%.
- International developed markets (stocks from wealthy countries outside the U.S.) gained 0.5% measured in U.S. dollars based on the MSCI EAFE Index, while emerging markets (stocks from developing countries) fell 2.5% based on the MSCI EM Index. For the year, the MSCI EAFE Index has gained 24.3% and the MSCI EM Index 27.1%.
- The U.S. dollar index (which measures the dollar’s value against other currencies) ended the month at 99.46 and briefly crossed the 100 level.
- Bitcoin (a digital currency) fell significantly by about 17% in November, ending the month at $91,176.
- Gold prices ended the month higher at $4,218 but remained below the October record high of $4,336.
- The September jobs report, which came out late because of the government shutdown, showed the economy added 119,000 new jobs and the unemployment rate went up slightly to 4.4% that month. There will be no October jobs report.
Markets temporarily moved away from riskier investments
In November, people who invest temporarily shifted away from riskier investments like technology stocks, high-yield bonds (bonds that pay more interest but carry more risk), digital currencies, and similar investments. This happened mainly because of questions about whether AI investments can keep growing and because investors changed their expectations about future Fed interest rate cuts. The S&P 500 has now had six drops of 5% or more this year, the most since 2022 but still close to what’s typical historically. Some major investment types bounced back in the last days of the month, and the S&P 500 ended slightly positive.
During the month, technology stocks related to AI had their worst week since April. Worries about how much these companies are spending and borrowing, their profit levels, and questions about whether prices are too high created uncertainty. However, the underlying business health remained solid with companies like Nvidia reporting strong revenue and earnings growth for the third quarter. Some stocks, including those in the Magnificent 7, recovered following these reports.
Digital currencies like Bitcoin experienced a sharp drop during this period when investors were avoiding risk. Bitcoin fell over 30% from its early October highs above $125,000, briefly trading below $85,000 and losing its gains for the year. While more investors have started using digital currencies, periods like this show that these investments can be highly unpredictable and go through extreme ups and downs. For this reason, managing risk carefully and maintaining a proper mix of investments continue to be important.
The bond market (where investors buy and sell bonds) rose in November, partly because long-term interest rates declined with the 10-year Treasury yield briefly falling below 4% again. This happened because of new expectations about government policies that could lead to lower rates over time. For the year, the Bloomberg U.S. Aggregate Bond Index has gained 7.5%, the best performance since 2020. This has helped provide stability to diversified portfolios (investment mixes that include different types of investments).
The government shutdown ended but economic uncertainty continues
The longest government shutdown in history ended after 43 days, but the federal government will only have full funding through the end of January 2026. This means political uncertainty will be back in the news in just a couple of months. That said, markets were generally able to move past the shutdown, even though the lack of economic data created greater challenges.
The Bureau of Labor Statistics (the government agency that tracks employment) released the long-awaited September jobs report, which was originally supposed to come out in October. This report showed that job gains were better than expected that month, bouncing back from weakness over the summer. However, the updated numbers show that 4,000 jobs were lost in August, the second month of job losses this year. The unemployment rate (the percentage of people who want jobs but don’t have them) went up slightly to 4.4% in September, its highest level since October 2021, though this is still low compared to history.
A full October jobs report won’t be published since surveys of households and businesses weren’t done during that month, but some of the information will be included with November’s report on a delayed schedule.
Market expectations for the next Fed interest rate cut have changed
These data delays mean the Federal Reserve will go into its mid-December meeting without having all the economic information. Expectations for an interest rate cut at the next Fed meeting have changed dramatically, with the likelihood dropping in mid-November before rising again. Right now, market-based expectations suggest the Fed will cut rates in December and then again in April or June 2026.
Other economic information, such as consumer confidence (how optimistic people feel about the economy), has also gotten worse. The preliminary estimate of the University of Michigan’s Index of Consumer Sentiment (a measure of how consumers feel) dropped from 53.6 to 50.3 in November. This reflects ongoing concerns among Americans about job security, higher prices, and their overall financial situations. While many households are feeling financial pressure, poor sentiment over the past few years hasn’t translated into reduced spending or lower company revenues.
The bottom line? November’s market swings and ongoing uncertainty across the economy remind us that changes in the stock market are normal. People who invest should keep a broader view as we approach the end of the year.
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