November is typically a strong month for stocks, at least based on the S&P 500’s long-term record. But this year has been far from smooth.
Markets have spent November on a knife’s edge, swinging sharply intraday as traders rush to sell—and then jump back in to buy—sometimes within hours. Concerns over stretched valuations, especially in AI-related stocks, have played a major role. At the same time, interest rates and the cost of funding the AI boom have become central to the market’s narrative.
Nvidia’s strong quarterly results briefly calmed nerves last week, but the relief didn’t last. Selling resumed as investors shifted focus to the Federal Reserve’s upcoming December 9–10 meeting and the possibility of further rate cuts.
Monday brought another burst of optimism, fueled by New York Fed President John Williams’ support for more easing. That helped extend Friday’s late-session rally.
“It’s becoming clearer every month how interconnected everything is,” said Andrew Briggs, director of portfolio management at Briggs Group with Plaza Advisory Group. “There are basically two economies right now: AI—and everything else.”
Eyes on the Fed
San Francisco Fed President Mary Daly added to the dovish tone Monday, saying she supports another December rate cut due to labor-market concerns.
Tech led the charge: the Nasdaq jumped 2.7%, the S&P 500 rose 1.6%, and the Dow added 0.4%, per FactSet.
Gold also climbed, adding to its massive 56% year-to-date gain, while bitcoin stayed under pressure and Treasury yields slipped.
Falling long-term yields can ease borrowing costs, giving the economy and rate-sensitive stocks—like small caps—room to breathe. That may be why AI names and the Russell 2000 both rallied.
“You either day trade in chaos based on unexplained moves,” said Viktor Shvets of Macquarie Capital. “Or you invest”—specifically in areas with stronger growth potential.
Despite recent “heart palpitations,” Shvets expects the Fed to cut rates soon, citing the tight feedback loop between asset prices, spending, retirement accounts, and economic growth. “Policymakers can’t allow a broad deflation of asset prices,” he said.
The probability of a December rate cut climbed back above 80% on Monday, up from 42% a week earlier. Big tech was a standout: Tesla surged nearly 7%, Alphabet gained 6%, and Amazon rose 2.5%.
Tech stumbles in a tough month
Historically, November delivers an average 2.2% gain for the S&P 500, based on data going back 25 years. But this month has broken the pattern. The index is still down nearly 2% heading into the final week, putting it on track for its worst November since 2008.
That’s despite Alphabet’s 13% November gain and Apple’s 2% rise. Many other major AI names, however, are heading for monthly losses.
“The market has some AI fatigue,” said Donald Calcagni, CIO at Mercer Advisors. Nvidia’s explosive earnings growth has helped justify lofty valuations in the sector—but investors remain wary.
A pause in rate cuts—or a shorter-than-expected cutting cycle—would undermine a key assumption behind recent gains: that debt would keep getting cheaper, supporting both corporate spending and AI investments.
On the flip side, even a routine 10% market pullback could hit high-income consumers who have been driving spending. A slowdown in tech and AI stocks could ripple into restaurants, entertainment, and other sectors that rely on lower-income workers—groups already squeezed by inflation and last year’s rate environment.
For the bull market to continue, liquidity will need to keep flowing, said Briggs. “Either from a central bank or fiscal support.”
Outside the AI boom, he added, much of the economy is struggling. But if the Fed cuts too deeply, policymakers risk reigniting inflation.
